Including Inclusionary Zoning: The Case of New York City
by
Gretchen Ann Maneval
B.A. Political and Social Thought
University of Virginia, 1996
Submitted to the Department of Urban Studies and Planning
in partial fulfillment of the requirements for the degree of
Master in City Planning
at the
MASSACHUSETTS INSTITUTE OF TECHONOLOGJ
MASSACHUSETTS
OF TECHN01
June 2003
© 2003 Gretchen Ann Maneval. All Rights Reserved.
LIBRAR
The author hereby grants to MIT permission to reproduce and to distribute publicly paper and
electronic copies of this thesis document in whole or in part.
Author
Department of Urban Studies and Planning
May, 2003
Certified by
Professor Langley Keyes
Department of Urban Studies and Planning
Thesis Supervisor
Accepted by_
Professor Langley Keyes
Chair, MCP Committee
Department of Urban Studies and Planning
ROTCH
Including Inclusionary Zoning: The Case of New York City
by
Gretchen Ann Maneval
Submitted to the Department of Urban Studies and Planning
on May 15, 2003 in Partial Fulfillment of the Requirements for the
Degree of Master in City Planning
ABSTRACT
This thesis aims to lay a foundation for a more informed discourse on including inclusionary
zoning as a mechanism for creating affordable housing in New York City. To this end, it
provides a brief history of inclusionary zoning, and explores the general legal, economic,
social, and political arguments for and against this policy tool. It examines the New York
City housing crisis, and the issues of gentrification and displacement that are confronting the
city. Interview responses of stakeholders, and the varied positions articulated in policy briefs
and public hearing testimonies regarding the renewed inclusionary zoning debate in New
York City, are presented. A case study of the rezoning proposal by the Department of City
Planning for the neighborhood of Park Slope, Brooklyn and the inclusionary zoning debate
that accompanied it, is used to frame the positions for and against inclusionary zoning. It
also highlights the ideological and political pressure surrounding the public hearing process
and the policy decisions that were ultimately reached in this New York City case.
Recommendations are given for elements that should be included in a new inclusionary
zoning program in New York City, as are suggestions for future research and policymaking
strategies.
This thesis postulates that inclusionary zoning is a viable policy tool for incenting the
development of affordable housing in New York City and maintains that the housing
landscape of New York City in 2003 is ripe for a new inclusionary zoning program. It argues
that a strong housing market, especially in certain gentrifying neighborhoods, combined with
a continued crisis regarding the affordability and availability of housing, sets the stage for a
new inclusionary zoning program. Furthermore, it contends that not only do the rezoning
and upzoning proposals by New York City's Department of City Planning (DCP) provide an
environment of increased development capacity in several of the city's neighborhoods
conducive to the application of inclusionary zoning density bonuses, but that these proposals
also exacerbate the trends of gentrification and displacement.
This thesis proposes that by leveraging the financial capacity and development efficiency of
for-profit developers, New York City can ensure a low-cost, high quality housing product for
working families. Further, it suggests that the application of a new inclusionary zoning
program will allow developers the benefit of increased density, and when combined with
other financial and tax-based incentives, can achieve an even higher profit margin than with
as-of-right development.
Thesis Supervisor: Langley Keyes
Title: Ford Professor of City and Regional Planning
Table of Contents
5
Chapter 1: Thesis Introduction and History of Inclusionary Zoning ..............
5
7
I. Thesis Introduction ...................................................................................................
II. The History of Inclusionary Zoning .........................................................................
Chapter 2: General Arguments Related to Inclusionary Zoning................................11
1.Legal..........................................................................................................................II
II. Economic....................................................................................................................15
A. Impact on Developers..........................................................................................15
16
B. Impact on Consumers and Landowners ..............................................................
17
C. Impact on Market...............................................................................................
III. Social........................................................................................................................20
23
IV. Political.................................................................................................................
23
A. Political Feasibility ............................................................................................
B. Appropriate Policy for Addressing Affordable Housing Needs in a Community......24
C. Appropriateness of Zoning to Impact Socioeconomic Characteristics..................25
26
D. Environmental Impacts.......................................................................................
Chapter 3: Setting the Stage for Inclusionary Zoning in New York City...................27
I. Addressing New York City's Housing Crisis...............................,...........................
A. New York City Housing Crisis ..............................................................................
B. Brooklyn Housing Crisis .....................................................................................
C. Park Slope Housing Crisis...................................................................................
II. Gentrification and Displacement........................................34
III. Rezoning and Upzoning .......................................................................................
A. Park Slope Rezoning Proposal............................................................................
B. Problems with the Park Slope Rezoning Proposal: No Affordable Units and
Displacement...................................................................................................
Chapter 4: New York City and Inclusionary Zoning .................................................
29
29
31
32
36
36
47
51
I. The History of Inclusionary Zoning and the Inclusionary Housing Program in New York
City ............................................................................................................................
51
54
II. A Renewed Inclusionary Zoning Debate in New York City ...................................
A. Uniform Land Use Review Procedure (ULURP) and the Park Slope Rezoning
Proposal...........................................................................................................
57
61
B. New York City Department of City Planning ..........................................................
64
C. New York City Council ........................................................................................
D. Brooklyn Borough President's Office ...................................
67
E. Housing Organizations........................................................................................
68
F. Developers ..........................................................................................................
78
Chapter 5: Inclusionary Zoning Policy Options and Strategies in the New York City
Housing Environment...................................................................................
81
I. Ideal Housing Environment in New York City for Inclusionary Zoning ................... 81
84
II. Legal, Economic, Social, and Political Arguments to Consider ................................
III. Recommendations for Elements of a New York City Inclusionary Zoning Program... 89
A. Mandatory or Voluntary?.............................................. .... .... ..... ....... ........ ....... . . 89
89
B. Population Targeted............................................................................................
90
C. Incentives to Balance Costs.................................................................................
90
D. Number or Percentage of Affordable Units Required ..........................................
E. Tenure.....................................................................................................................90
90
F. Purchase Price or Rent........................................................................................
90
G. Location of Affordable Units ..............................................................................
91
H . Term of Affordability .............................................................................................
91
I. Provision for In-lieu Fees .....................................................................................
91
J. Comparability in Quality of Market and Affordable Units...................................
K. Program M anagement.............................................................................................91
92
IV. Future Research and Policymaking.......................................................................
A. Research.................................................................................................................92
93
B. Policymaking .....................................................................................................
Appendix...........................................................................................................................97
List of G raphs, M aps, Tables, and Charts .....................................................................
Bibliography.......................................................................................103
Biographical Note............................................................................................................109
101
Chapter 1: Thesis Introduction and History of Inclusionary
Zoning
. Thesis Introduction
Inclusionary zoning is a viable policy tool for incenting the development of affordable
housing in a community. By leveraging the financial capacity and development efficiency
of for-profit developers, municipalities can ensure a low-cost, high quality housing product
for working families. Developers can receive the benefit of increased density, and when
combined with other financial and tax-based incentives, can achieve an even higher profit
margin than with as-of-right development.
The goal of this thesis is to lay the foundation for a more informed discourse on including
inclusionary zoning as a mechanism for creating affordable housing in New York City
(NYC). The legal, economic, social and political arguments for and against inclusionary
zoning presented in this thesis provide a persuasive context for the application of this
policy tool to New York City. This thesis presents interview responses of New York City
stakeholders, and the varied positions articulated in policy briefs and public hearing
testimonies, to frame New York City's inclusionary zoning debate.
A rezoning proposal by the Department of City Planning for the neighborhood of Park
Slope, Brooklyn provided one of the first forums for the renewed inclusionary zoning
debate in New York City. The Park Slope Rezoning Proposal is used here as a case study
to explore the positions for and against inclusionary zoning, and serves to highlight the
ideological and political pressure surrounding the public hearing process and the policy
decisions that were ultimately reached. Recommendations are given in this thesis for
elements that should be included in a new inclusionary zoning program in New York City,
as are suggestions for future research and policymaking strategies.
The remainder of Chapter 1 presents a brief history of inclusionary zoning in the United
States. Chapter 2: General Arguments Related to Inclusionary Zoning, examines and
responds to the legal, economic, social and political arguments for and against inclusionary
zoning. The constitutionality of inclusionary zoning is discussed, supported with examples
of precedent-setting court cases. Arguments are presented relating to the economic impact
of inclusionary zoning on developers, consumers, landowners, and the housing market in
general. Chapter 2 also includes value-based social arguments that support or oppose a
diversity of incomes in a community, and a discussion of the use of inclusionary zoning to
mitigate the negative effects of the phenomena of gentrification and displacement. Chapter
2 closes with a dialogue about the political feasibility of an inclusionary zoning program
and environmental impacts of such a program. This final section also discusses the
appropriateness of both using inclusionary zoning to address affordable housing needs in a
community, and the broader question of using zoning to impact socioeconomic
characteristics of a community.
Chapter 3: Setting the Stage for Inclusionary Zoning in New York City presents a
statistical analysis of New York City's housing crisis for the entire city, the Borough of
Brooklyn, and the neighborhood of Park Slope. The process of gentrification, and the
resulting displacement of moderate- and low-income families at the neighborhood level, is
also addressed. The Park Slope Rezoning Proposal put forth by the New York City
Department of City Planning is explained, and the plan's negligence in failing to provide
for affordable units, as well as the potential displacement of long-time residents that may
accompany the Park Slope upzoning, is addressed.
Chapter 4: New York City and Inclusionary Zoning provides a brief history of
inclusionary zoning in New York City, and presents the elements of the current
Inclusionary Housing Program. The renewed debate about the use of inclusionary zoning
in New York City is portrayed through the presentation of stakeholder perspectives,
including the viewpoints of representatives from: the New York City Department of City
Planning; the New York City Council; the Brooklyn Borough President's Office; New
York City housing organizations; and the for-profit development community.
Chapter 5: Inclusionary Zoning Policy Options in the New York City Housing
Environment advocates for the use of inclusionary zoning as a feasible, low-cost
mechanism for the provision of affordable housing in New York City, and responds to the
different arguments put forth by stakeholders. Given the ideal housing environment in
New York City for a new inclusionary zoning provision, recommendations are made for
the various elements of such a program. Finally, a strategy is suggested for future research
and policymaking for the application of inclusionary zoning in New York City.
The housing landscape of New York City is ripe for a new inclusionary zoning program. A
strong housing market, especially in certain gentrifying neighborhoods, combined with a
continued crisis regarding the affordability and availability of housing, sets the stage for an
inclusionary zoning program, Furthermore, the rezoning and upzoning proposals by New
York City's Department of City Planning (DCP) provide an environment of increased
development capacity in several of the city's neighborhoods, allowing for density bonuses,
and a planned mix of incomes in new development.
It is hoped that this thesis contributes to a more informed engagement of the relevant New
York City stakeholders in a process to change the Zoning Resolution to include the specific
form of inclusionary zoning that optimizes the amount of affordable housing built, given
the financial feasibility of the program.
I. The History of Inclusionary Zoning
In 1926, the U.S. Supreme court deemed constitutional the power of state government to
separate land uses into districts in its precedent setting case for zoning: Euclid v. Ambler.
Since then, the concept of zoning and its application has grown and varied. Inclusionary
zoning's predecessor is incentive zoning, which is used to "provide economic benefits for a
developer, who in return provides a certain desired public amenity in the development.
Public capital is mobilized to create built benefits that otherwise would not exist, unless
directly subsidized by the public sector. Ideally, the city would use creation of its
regulatory zoning powers to provide the developer with a bonus equal in value to the cost
of the amenity, plus some marginal increment. The bonus should be just large enough to
provide the private developer with an incentive to build the amenity."' As explained by
Jerold Kayden, "Euclidian classical zoning is essentially negative in character, a divide that
specifies what cannot be done on any particular property. Incentive zoning goes beyond
this nuisance aspect of denying incompatible activities, moving toward more directional
planning to achieve the ideal city." 2
The genesis of inclusionary zoning came about in the 1970's in response to: exclusionary
zoning; a severe shortage of affordable and decent housing; and government programs
which were targeting a very low-income population, but were not effectively addressing the
needs of moderate- and low-income households. The historical and inherently
exclusionary nature of zoning was taking its toll on the urban and regional landscape. This
landscape had become one of extremes: inner city vs. suburbia; industrial vs. residential;
wealthy vs. poverty stricken; black vs. white. Following the tide of the civil rights
movement, socioeconomic integration as a means to equality of opportunity and a healthy
society became a primary goal of many planners. Inclusionary zoning became a low-cost
instrument for planning integration by dictating requirements on the income mix of new
developments in suburban areas.
Also during the 1970's, a housing crisis was unfolding as much of the new housing that
was being produced by the market was beyond the financial reach of not only low-income
populations, but the middle class. Furthermore, the federal and state programs of public
housing, Section 8, were serving the poorest of the poor, channeling all of their
programmatic resources away from the middle class.
In its 1975 Mt. Laurel case, New Jersey's Supreme Court held forum to inclusionary
zoning's first precedent case (Mt. Laurel I), when the case plaintiff argued that "it is the
duty of the municipality to ensure that construction of a sufficient suppl! of least cost
housing will actually take place, given the realities of the marketplace." This argument,
officially adopted in the 1983 Mount Laurel II case, resulted in inclusionary zoning
becoming a mandated tool for municipalities in New Jersey if they failed to provide their
fair share of the regional housing need. The court contrasts the mandatory set-aside of this
'Jerold Kayden, Incentive Zoning in New York City: A Cost-Benefit Analysis (Land Policy Roundtable Policy
Analysis Series number 201. Cambridge:Lincoln Institute of Land Policy, 1978), 9.
2
Ibid, ii.
IIbid, 8.
inclusionary4 measure as a more effective approach than the previous voluntary approach
(what it considered incentive zoning). The 1985 Fair Housing Act in New Jersey created
the Council on Affordable Housing to implement the fair share and inclusionary housing
provisions.
During the 1980's, many communities, and several states around the country, enacted some
form of inclusionary zoning, or implemented programs mandated by the court system. In
1984, Alan Mallach described inclusionary zoning as "a program designed to bring about
housing affordable to low- and moderate-income households in a community, using a
variety of programs and activities, but relying principally for its implementation on an
inclusionary zoning ordinance." 5 He goes on to define an inclusionary zoning ordinance as
"a zoning scheme under which prospective developers are required by a municipality or
county to provide, as a condition of approval, or alternatively, are given incentives to
provide, low- and moderate-income housing as a part of or in conjunction with, their
proposed development projects." 6 In the 1980's, inclusionary zoning was used in
communities primarily to encourage the production of lower-income housing, and therefore
mixed-income communities, in suburban areas. Different strategies were pursued, from
establishing housing trust funds, to creating linkage policies, to adopting voluntary
affordable housing density bonus programs and mandatory set-asides. Through these
programs, municipalities and states began leveraging the capital of the for-profit residential
and commercial development community to produce affordable units. From Montgomery
County, Maryland's Moderately Priced Dwelling Unit program to Massachusetts' AntiSnob legislation, the concept of inclusionary zoning in various forms became recognized as
a viable option for suburban communities to generate affordable housing.
Inclusionary zoning techniques were debated for use in central cities as well, as
metropolises such as New York City were gathering planners from around the country to
debate the merits of this zoning tool's effectiveness in resolving the housing crisis, and
mitigating displacement. Higher-income populations had begun to return to central cities,
finding a low-cost, architecturally attractive housing stock, which was also located closer to
their jobs, and in neighborhoods with increasing services and cultural amenities. Though
continuing the use of inclusionary zoning to produce affordable housing and promote
socioeconomic integration, the difference from the suburban, planned unit development
use, was that the inner cities were recovering from abandonment and neglect. Instead of a
planned, "new town" ideal, planners and city officials were watching the upswing in
development with a sense of desperate anticipation, grateful for the opportunity for
rejuvenation, revitalization, and the money that came with "gentrification," to bring their
ailing cities back to life. They needed to craft inclusionary zoning programs that would not
only not thwart this new development, but make it even more profitable. Hundreds of
cities, municipalities, and states around the country have implemented urban and suburban,
voluntary or mandatory, inclusionary housing programs with varied degrees of success. A
4 The
definition of inclusionary zoning has expanded to both voluntary and involuntary measures subsequent to
this Court's interpretation.
5 Alan Mallach, InclusionaryHousing Programs:Policiesand Practices(New Jersey:Rutgers, 1984), 2.
6 Ibid.
table of inclusionary housing characteristics, including number of units produced, is
provided in the Appendix.
Inclusionary zoning continues to be used by urban and suburban communities to incent the
development of market-rate and affordable housing. Developers are able to receive higher
profits than with as-of-right zoning, and the municipality, by using its zoning authority, is
able to respond to a housing crisis with a low-cost, efficient policy. By including
inclusionary zoning, a community can also facilitate and maintain socioeconomic
integration, and the equality of opportunity for decent housing for all residents.
10
Chapter 2: General Arguments Related to Inclusionary Zoning
In debates about inclusionary zoning, four broad, and sometimes overlapping categories of
arguments emerge: legal, economic, social, and political. The presentation of these
arguments, and rebuttals to them, provide a framework for arguments related to the specific
case of New York City presented in Chapters 3 and 4 of this thesis.
I. Legal
For the last thirty years, litigation over the legality of various inclusionary zoning
ordinances has been played out in courtrooms across the country, from small town
municipal courts to State Supreme Courts. Courts have been involved in both mandating
quotas for affordable housing, and in resolving the challenges to legislated inclusionary
zoning ordinances. It should be noted that most litigation surrounds mandatory
inclusionary zoning ordinances (as opposed to voluntary), although clear precedents have
been established surrounding the legality of these mandatory provisions. When a state,
county, or local government considers the legality of an inclusionary ordinance, it must
consider two issues: (1) the constitutionality of the ordinance, and (2) whether the relevant
government entity has either expressed or implied statutory authority to adopt the
ordinance. Arguments relating to the constitutionality of inclusionary zoning are presented
below.
The debate surrounding the constitutionality of inclusionary zoning is often based upon the
constitutionality of zoning in general. The 1926 Euclid v. Ambler Realty Company case
decreed that zoning was an appropriate exercise of the state's police power to protect the
public health, safety, morals, and general welfare of its people. Some argue against
inclusionary zoning on the grounds that it is neither an appropriate use of police power, nor
does it uphold public health, safety, morals, and the general welfare. Advocates of
inclusionary rebut that traditional zoning has not only often impeded public health, safety,
morals and general welfare, but that it has exacerbated socioeconomic segregation, and that
inclusionary zoning is a remedy for these negative externalities of historical zoning policy.
Moving beyond the general zoning arguments, there are three possible challenges related to
the constitutionality of inclusionary zoning (again, mostly pertaining to mandatory
ordinances): (1) substantive due process is not satisfied; (2) equal protection is not
provided; and (3) inclusionary zoning is a taking of a developer's property without just
compensation because there is not a clear nexus between the new development and the
need for affordable housing.
Substantive due process and equal protection issues are generally not challenged, as long as
the ordinance appropriately addresses these issues. Substantive due process issues are
raised if density incentives and mandatory set-asides do not meet the substantive due
process objectives of zoning. This issue is usually satisfied if it is demonstrated "that a
rational relationship exists between the regulation and the public purpose to be served, and
that the means of a achieving that purpose are also reasonable." 7 To satisfy substantive due
process, the entity proposing the inclusionary ordinance should research and present an
evaluation of general housing need, and state this purpose in the ordinance.
According to Alan Mallach, to determine whether equal protection might pose a
constitutional problem, one should ask the question "does the burden of the land-use
regulation fall unreasonably on one group, or... (is) a particular group...treated differently
from another?"8 Equal protection issues might arise if only a certain category of new
developments, for instance, those with forty units or higher, are targeted by the ordinance.
This also may become a problem when "inclusionary zoning bylaws impose inclusionary
requirements in one zone but not in a second, otherwise identical zone." 9
"The Fifth Amendment to the United States Constitution provides that private property
'shall not be taken for public use without just compensation.'"1 Those who oppose
inclusionary zoning based on the taking issue present two arguments: (1) there is no clear
relationship or nexus between the development of market-rate housing and the generation
of the need for affordable housing, and (2) therefore private developers should not be
unfairly singled out to bear the burden of providing a public good such as affordable
housing, adversely impacting their profits.
As Thomas Kleven points out in Inclusionary Zoning Moves Downtown, the nexus issue
stems out of parallels being drawn between inclusionary zoning and the constitutional
issues surrounding exactions. "The purpose of the nexus test is to ensure that exactions are
not used to extract benefits which are primarily public in nature and for which the public
should, therefore, pay- in short, to protect against unfair allocation of the costs of
government."" Alan Mallach argues that "the imposition of an inclusionary zoning
ordinance is use of the police power in order to serve the general welfare... by setting
specific standards to govern the nature of the development that will take place in certain
districts. It is not an exaction, which is by nature external to the use permitted in the
zoning district."' 2 It is possible that off-site development or the payment of fees in-lieu of
developing affordable housing might fall into the category of an exaction.
Displacement of residents caused by new development creates a nexus relationship
between redevelopment and the need for affordable housing. Both primary and secondary
displacement may occur when a developer constructs or rehabilitates new or existing units.
Primary displacement occurs when a developer physically demolishes existing occupied
affordable units and builds new, higher-income units in their place. It can also occur when
a developer rehabilitates an existing occupied structure, and either offers the current tenant
compensation to leave the unit (a buyout), or outright evicts the tenant, so that she can raise
the rent of the units (or in the case of for-sale units, sells the units at a higher price). Even
Metropolitan Area Planning Council, InclusionaryHousing and Linkage Programsin MetropolitanBoston
May 1986), 33.
35.
9 Ibid, 35.
8 Ibid,
10 Mallach, 33.
" Brower, 109.
12Mallach, 36.
if one subscribes to the Filtration Theory' 3 , it does not allow for a sufficient number of
affordable units. Secondary displacement is triggered by an increase in land value because
of the new development and is the result of a cumulative effect of new development and
gentrification in an area. High rent and for-sale prices in one building will lead to a rise in
asking rent and prices in surrounding buildings, as landlords and owners respond to the
new capacity of the market to receive a higher-income population.
Several court cases in the 1970's and 1980's established the constitutionality of
inclusionary zoning and determined that it is not a taking of private property in terms of the
undue burden aspect. The Mt. Laurel II case states "zoning does not require that land be
used for maximum profitability, and on occasion, the goals of zoning may require
something less." 4 Daniel Mandelker argues that "because the number of units required to
be set aside for lower-income housing is usually a limited percentage.. .the effect on the
developer's return is marginal. Developers will have difficulty proving.. .that they can
make no reasonable use of the land if they comply with the mandatory set-aside
requirement."1
The New York Court of Appeals case Golden v. Planning Board of Ramapo decision is as
follows: "The fact that (an) ordinance limits the use of, and may depreciate the value of the
property will not render it unconstitutional.. .unless it can be shown that the measure is
either unreasonable in terms of necessity or the diminution in value such as to be
tantamount to a confiscation."
An ordinance in Cherry Hill, New Jersey was challenged in 1980 by Uxbridge Associates,
who argued that a requirement that five percent of newly constructed units in a high density
multifamily zone be affordable to low- or moderate-income households was
unconstitutional. The court said that no taking had occurred, and if the developer had
perceived an economic hardship due to the ordinance, he could have taken steps to mitigate
this with government subsidies.
Thomas Kleven states "if no economic loss results from having to comply with the
inclusionary requirements, then the unfairness claim is undercut..." He asks, "...since the
purpose of the nexus test is to discover where there has been unfairness, should a
community then have to show a nexus at all between new development and the need for
low-cost housing?"' 7
To avoid a constitutional challenge, inclusionary zoning ordinances have proactively
addressed the concerns around the nexus and taking issue. Government entities have
The Filtration (or trickle down) Theory is based on the concept of laissez-faire in that absent government
intervention, the market will bear a certain number of units affordable to upper-income persons. The theory
postulates that the units that are vacated by the upper-income persons will be available to moderate-income
persons. The units vacated by moderate-income units will be available to lower income persons, and so the
cycle continues.
14 Brower, 34.
1
Ibid, 35.
1Mallach,
17 Brower,
33.
119.
demonstrated how legislation supports proposed ordinances. They have documented the
need for affordable housing, examples of exclusionary zoning, and past or current
displacement. They have ensured through density bonuses and other financial incentives
that a landowner or developer is not being deprived of profit or reasonable use of property.
Mandating on-site affordable units, and linking the ordinance to their comprehensive plan
has also helped dissuade challenges.
11. Economic
Players on all sides of the inclusionary zoning debate, from developers to local government
to affordable housing advocates, share similar economic arguments for or against
inclusionary zoning. Of course, these arguments tend to diverge in their origin and
purpose. Presented below is an outline of the most commonly cited economic arguments
and rebuttals surrounding inclusionary zoning. It should be remembered that variations in
the elements of different inclusionary zoning programs (i.e. mandated or voluntary
programs, on- or off-site requirements, etc.) will impact the relevance or magnitude of
some of the following arguments. The economic arguments are grouped into three
categories: Impact on Developers, Impact on Consumers and Landowners, Impact on
Market.
A. Impact on Developers
One of the major arguments that developers make in protesting inclusionary zoning
ordinances is that they inevitably have to cut into their own profit margin to help
subsidize the affordable units developed under an inclusionary program. With a
voluntary program, if developers believe that loss of profit will result, they most likely
will not participate, avoiding perceived adverse impacts on profit. Therefore, the primary
concern for developers lies with mandated inclusionary zoning. It is reasoned that small
developers are impacted to an even greater extent given their smaller profit margin.
Opponents of inclusionary zoning say that it is implicitly a tax on developers, adding to a
long list of regulatory and tax burdens with which they have to contend. Finally, some
opponents argue that inclusionary zoning reduces the value of a development for resale,
especially in a soft market.
There are several responses to these arguments. The first is that, if a program is modeled
correctly, the formula should include some kind of incentive (density bonus, expedited
permitting, tax incentives, etc.) to offset the costs associated with both construction and
subsequent decreased rental or sale income of affordable units. The second response is
that 'profit margin' is an amorphous concept in development. Any developer knows that
much of a development budget is, from the onset, speculation, and that as a project moves
forward, adjustments to sources and uses of funds and costs are constantly being made.
Profit margin is subjective, and it is difficult to prove the actual effects that inclusionary
zoning ordinances have had on profit. Numbers in a spreadsheet can be massaged to say
almost anything, and even the same numbers can be interpreted very differently by the
various players in a debate. Looking at the participation rates of developers in voluntary
programs, and the profits of developers in mandatory programs could help inform the
structuring of an effective inclusionary zoning program. In terms of adversely impacting
resale value, this argument is probably accurate when conducting valuation based on
future income streams. If a potential buyer of a building looks at the reduced rental
income from moderately priced rental units, they may be willing to offer less money for
the purchase of that property.
Developers may also argue that including affordable units as part of their market
development will not only lower the value of the market-rate units, but will cause
potential buyers and tenants to shy away from the development altogether. An example
of one such argument is, "in uniquely attractive communities, where uniqueness stems
from exclusivity, demand for market-rate units that are integrated with below-market
units is apt to be considerably less than it would in the absence of an inclusionary
requirement... (because) in exclusive communities, homebuyers tend to be fairly
homogenous with respect to income, and not likely to want to purchase housing in
economically integrated areas." 8
In response to this argument, one need only look at the mix of income both within
developments and within neighborhoods that is prevalent in cities across the country.
Developers plan for a mix of income all the time by offering studio apartments and
penthouse suites in the same building, and single family homes, townhouses, and
apartments in the same development. This does not deter consumers from purchasing
these products, and in fact, is often an attractive feature. In mixed-income developments
planned by local governments and non-profit developers, often times market-rate
consumers outright support the diversity of elderly and young families with varied
incomes, or they aren't even aware of the mixed-income nature of the development.
Furthermore, the "affordable" units in the mixed-income developments created by
inclusionary zoning ordinances often target persons at 80% to 120% of area median
income; this means people that are teachers, police officers, and nurses. The importance
and reasons behind supplying housing for these moderate-income persons is addressed
further in the 3. Social section of Chapter 2.
In tight housing markets like New York City, all decent housing is in demand, and it is
the culture of the city that people of diverse incomes, races, and professions live among
one another. Developers need not fear that potential consumers would boycott their
property because a teacher and his family are living on the floor above. Developers that
support inclusionary zoning say it in fact mitigates financial uncertainty as they can be
sure that the affordable units will be in high demand.
B. Impact on Consumers and Landowners
Local governments in opposition to inclusionary zoning argue (and some developers
concur) that the cost of affordable units is passed on to the consumer and landowners
because in order to not lose profit, the developer either pays less for land, or raises the
price or rent of the market-rate units. Much of this issue relies on the concept of
elasticity of supply and demand: if substitute housing is not available, the increase in
price will theoretically be borne by consumers. However, it follows that if demand is
elastic, and homebuyers or potential renters can substitute away from a development,
prices will be lower, and the developer will offer less money to the landowner to
purchase the land (in this case, the landowner would be affected). If indeed the developer
would not absorb hypothetical increases in costs of production (or rather decreases in
income), opponents to inclusionary zoning ask whether it makes sense to have a policy
Marc T. Smith, Charles Delaney, and Thomas Liou, "Inclusionary Housing Programs: Issues and
Outcomes," Real Estate Law Journal,Vol. 25, no.2 (Fall 1996): 165.
with the goal of providing affordable housing for a few that results in increased prices of
housing for the many consumers who do not qualify for inclusionary units.
The above argument is based on the assumption that inclusionary zoning ordinances do
increase the costs of developers, and that developers would pass on those costs to
consumers or landowners. Again, as mentioned before, it is quite possible to model a
program to ensure a loss in developer profit would not occur. However, if there were, for
some reason, increased costs, "a developed or developing community might also claim
that.. .inclusionary requirements and fees, to the extent that their costs are passed back to
landowners in the form of lower land prices and values, are a means to recapture the
unearned increment in land values which results not from the productive efforts of this
landowner but from the spillover benefits of other public (i.e. upzoning) and private
development to which the landowner is not in fairness entitled."' 9
When a homeowner of an affordable unit decides to sell, resale restrictions may limit the
profit allowed as a result of this transaction. Resale restrictions regarding both time and
money are paramount to stopping a purchaser from buying a unit at a low price, turning
around and selling the unit immediately at a market-rate, and receiving a huge windfall.
Limits on selling price also allow for the stock of affordable units to not diminish as units
are sold over time. Unfortunately, resale restrictions are a "Catch-22": one of the
primary benefits of homeownership is the equity realized by a homeowner upon sale of
their property, due to market appreciation or improvements made to their property. For
affordable homeownership units developed under inclusionary zoning ordinances, the
trade-off between the relinquishing of accumulated equity, and the benefits of providing
permanent housing for moderate-income households, is an issue that will have to be
further debated by policymakers.
C. Impact on Market
The most widespread argument against inclusionary zoning (especially in areas where
there is a housing crisis) is that the increased costs (whether real or perceived) of
development will chase developers away from adding to the already scant supply of
housing. The concern of decreased housing production may have some merit in soft
markets, or in smaller markets trying to attract development. However, in markets such
as New York City, the demand for housing is increasing at a pace far exceeding
development (as statistics presented in Chapter 3 attest to). The competition among
consumers for both rental and homeownership units is fierce. In addition, the current cost
of capital is at record lows, balancing relatively higher construction costs. Where there is
a demand for residential units, developers will be likely to follow. Furthermore, density
bonuses should reduce land and development costs as they allow for more housing units
to be built per area of land, spreading costs over more units.
Opponents of inclusionary zoning argue that if developers are willing pay less for land
because of anticipated increased costs, landowners will be unwilling to sell their land at
the lower prices. Some fear this will result in less land available for development, and
therefore, less development. Again, the supposition here is that developers' costs do, in
Brower, 121.
---
No!
-
. .
.- --
- -
-
1
fact, increase, and that developers would offset this increase by reducing costs associated
with purchasing land. As discussed above, a well crafted program can ensure that
developer's costs do not increase. Further investigation of precedent experience relative
to these claims would benefit the discourse around the economic impacts of inclusionary
zoning ordinances.
Continuing along the theme of land value, Alan Mallach states that "...the effect of an
inclusionary housing program on land value in a given zone... is identical to that of a
downzoning of the same land. As the prospective income stream from the property is
reduced, the value of the land is proportionately diminished"20 However, municipalities
downzone as normal practice and policy all over the country, and with this policy,
landowners are never compensated for any potential decrease in the opportunity cost of
what the value of their property might have been had they decided to redevelop. Yet with
an upzoning or rezoning that increases the value of land, depending upon the extent of the
change, inclusionary zoning can leverage this increase to provide affordable units with no
net cost to the developer.
An economic (albeit ideological) argument presented as an alternative to inclusionary
zoning programs, or any government policy or subsidy relating to the provision of
affordable housing, is that a filtration or trickle down of housing units from the wealthy
will provide for the necessary amount of affordable housing in a community. This theory
does not take into account the pyramid structure of our economy, with a small portion of
upper-income persons demanding a small number of new or redeveloped units. The
demand by both moderate- and low-income households will far exceed the supply of
units left vacated. This theory also does not consider the inevitable deterioration of units
traveling through the housing cycle.
Inclusionary zoning increases access to employment for moderate- and low-income
workers. In this sense, inclusionary zoning supports the economic development goals of
a city by creating affordable housing for workers to live in.
The aggregate impact of inclusionary housing programs on housing markets merits
further investigation by economists and urban planners, perhaps looking at the markets of
municipalities with established mandated inclusionary zoning programs. It will of course
be difficult to know what the market would have been like without the program, so it
might also be beneficial to collect housing data in markets that are planning to implement
inclusionary ordinances in the next few years, so a baseline comparison would be
available.
In Inclusionary Zoning Moves Downtown, Michael Stegman argues that it is not
necessary to look at inclusionary zoning from an economic perspective: "Economic
efficiency is neither the sole basis for public action, nor the lone value that should be
maximized when the public sector intervenes in the housing market." 2' In a sense, he is
correct, as the data and quantitative analyses involved in crafting an inclusionary
20
2
Mallach, 90.
Brower, 101.
.1..
4
provision can, and have been, translated into economically and financially feasible
programs. Planning ideology becomes the stage upon which formulas are wrought, and
the numbers can, as with any policy, be used to support myriad ideologies. In this way,
as Stegman suggests, perhaps social and public good arguments may (and should), play a
larger role in determining the legitimacy of an inclusionary zoning provision. That said,
it is imperative that time is taken to flesh out financial and architectural models of any
inclusionary zoning ordinance proposed, and that results-driven research is conducted
(post implementation) of programs around the country regarding micro- or
macroeconomic impacts. This thesis highly recommends, but does not have the time or
the resources, to conduct such an investigation. However, this thesis does pursue
documentation, and to a certain extent, examination, of the past and current economic
arguments for and against inclusionary zoning with the hope that engaging the reader in
these arguments leads to further quantitative analyses regarding their merit.
III. Social"
"Inclusionary zoning will continue to be sought in tight and expensive housing markets
where there is socially responsible interest in providing both housing opportunity and
economic balance."23 Most of the arguments for inclusionary zoning are based on an
inherent belief that diversity of income, race, age, culture, and religion is a good thing. As
our society tends to be stratified to a certain extent with persons of similar income being of
a similar race, culture, etc., the equal opportunity for all groups to live in adequate housing
conditions is not always present.
Gentrification, when it does not entirely consume a low-income or working class
neighborhood, promotes diversity and deconcentrates poverty. However, when
gentrification begins leading to the displacement of persons of a certain income level (and
therefore, often times, a certain race, culture or religion), it becomes a force of social
exclusion and resegregation. Inclusionary zoning, by providing the opportunity for
moderate- and low-income persons to move to or remain in the central city, will ensure a
certain amount of sustained diversity.
In today's central cities, especially New York City, gentrification is displacing not only
low-income persons, but the middle class as well. A city's vitality will not be sustainable if
it houses primarily upper-middle and middle-class citizens, and especially if teachers,
healthcare workers, municipal service employees, and not-for-profit workers cannot afford
to live in the communities they serve. Fundamentally speaking, without diversity, what
will happen to our understanding and acceptance of people of different skin tones, religion,
and financial means?
It is unjust for families who have lived in their neighborhoods for generations to be denied
the benefits of the improved housing and amenities that come with gentrification. Are
these families to be uprooted to yet another neighborhood with unacceptable housing
conditions and services? "Rather than including them by offering decent education,
employment, and housing, the poor have been treated as an obstacle to urban revitalization.
It is only when we begin to act inclusionary that our cities will have a chance to grow
decently and equitably."2 4 Ironically, "ethnic minorities and the poor...carried the debt
service on devalued inner-city housing stock with their rent and mortgage payments. Their
servicing of these debts freed capital to be used on the supply side, to finance the
development of the new residential subdivisions in the suburbs. Minorities and the poor,
living in substandard housing which no one else would occupy and for which they have
overpaid, thus subsidized the development of exclusive housing for the more affluent ... "2
Many of the social arguments presented in inclusionary zoning literature relate to the traditional use of
inclusionary zoning to mix new developments in the suburbs, assuming of course that low- and moderateincome persons would move out of the central cities to inhabit the new affordable units. The social
arguments in this paper focus on inclusionary zoning as applied to existing, central city neighborhoods.
2 3Robert Burchell and Catherine Galley, "Inclusionary Zoning: Pros and Cons." InclusionaryZoning: A Viable
22
Solution to the Affordable Housing Crisis?New Century Housing, The Center for Housing Policy. Vol. 1, no.
2 (October 2000): 6.
2
2s
Brower, 4.
Brower, 67.
Inclusionary zoning, especially when it has a provision for local preference, may allow
working families to remain in their own neighborhoods.
The argument can be made that residents owning homes in a gentrifying neighborhood
should be able to benefit from the skyrocketing value of their home if they choose to sell,
or rent at higher levels to increase their income. The operative word here is choose. Often
times, due to the cumulative affect of deferred maintenance of property, lower- and
moderate-income owners may be forced to leave if they cannot afford to rehabilitate the
house to attain the higher rental income, or are unaware of how to leverage the newly
assessed value of their home to obtain loans for maintenance and repair.
Zoning policy has traditionally been exclusionary in nature, whether purposefully or not.
Inclusionary zoning provides a remedy to, or ameliorates the past negative segregative
impacts of zoning. Social inequity implications have been inherent in traditional zoning,
while "in a broad sense, inclusionary zoning represents the integration of social equity
goals into local land-use planning by stimulating the production of affordable housing." 26
There are several common social arguments made against inclusionary zoning. The
opposition has posed the question of whether social friction exists in mixed-income
developments. It has also been suggested that lower- and moderate-income families
located in high priced condominium developments find a transitory and less family
oriented atmosphere in buildings primarily occupied by young, white, single professionals
earning high incomes. This argument ties into a similar one that discusses a sense of
isolation of low- and moderate-income tenants from their previous community.
Others argue that those who would benefit from the affordable units, unless a local
preference restriction was implemented, might be university students or twenty-something,
white professionals who come from wealthy families, but who haven't yet reached their
full earning capacity. Inclusionary programs designating a mix of affordability within the
same building might also result in skimming the most credit-worthy, financially solvent,
highly employed and politically astute residents from lower-income neighborhoods,
"transport(ing) the citizens who could do the most for reviving.. .(the distressed
neighborhoods)... "2s
Social arguments for or against any policy tend to be inherently difficult to quantify, and if
quantifiable, even more difficult to evaluate. Conclusions drawn from, or decisions based
upon social analyses, despite the attempted rigor in objectivity, will still reflect an
ideological foundation of the decision maker. Social arguments for inclusionary zoning
may unwittingly have negative implications resembling economic, legal, and political
opposition arguments, or sadly, are purposefully cloaked in these other reasonings. The
social framework or belief system behind legal, economic, and political arguments must
extrapolated, teased out, and considered in policymaking. The social arguments for and
16 Ibid,
7.
27 Smith, 170.
28Burchell, 5.
against inclusionary zoning are also tightly wound with the social arguments surrounding
the need for affordable housing, and need to be teased out as well.
Furthermore, various incarnations of inclusionary zoning (on-site vs. off-site, population
targeted) may engender completely different social effects. For example, the development
of on-site affordable units promotes the highest degree of socioeconomic integration,
whereas if developers have the option of developing affordable units in an already lowincome neighborhood that is a few miles from their luxury development, isolation of
moderate- and low-income groups is perpetuated. Therefore, just as with the legal and
economic implications of inclusionary zoning, the social impact should eventually be
examined relative to the specific model of inclusionary zoning proposed.
IV. Political
There are several questions relating to the evaluation of inclusionary zoning from a
political standpoint. One can ask if it is a politically feasible strategy- that is, can it
successfully pass through the approval process of local government entities, as well as
garner the support of the affected constituency? Another question is whether this is an
appropriate policy for addressing the need for affordable housing in a city; will it be
effective, or is there perhaps a better strategy? A third question relates to the
appropriateness of the use of the regulatory tool of zoning to impact the socioeconomic
character of a community. Furthermore, when the details of a specific inclusionary zoning
model is decided upon by a City, the environmental impacts should be evaluated (i.e.
effects of increased density on transportation infrastructure, services, etc.) A political
analysis should consider all of the previously discussed aspects of inclusionary zoning:
legal, economic, and social. Most important to consider is that the political climate and
prevailing ideology of a city's elected administration can impede or facilitate the approval
of an inclusionary zoning program, regardless of the favorable research and successful
precedent experience that might be presented. This last point will be addressed in Chapter
5, specifically in relation to the case of New York City.
A. Political Feasibility
Whether or not an inclusionary ordinance will meet with political approval depends
greatly upon the specifics included in the ordinance, or the strategy used to apply it. For
instance, if the advocating entity decides to pursue application of the ordinance to all
residential zones within a municipality, the difficulty of political approval would be much
greater than if the ordinance is paired with a current zoning initiative (such as upzoning
of a defined area), or if it is passed as a mappable2 9 zoning option. Inclusionary zoning
can be attractive to local government as a policy for providing affordable housing
because basic zoning doesn't have to be changed.
Depending upon the group that proposes an inclusionary ordinance, different political
scenarios could ensue, For example, in cities like Chicago and New York City, local
affordable housing advocacy organizations are spearheading inclusionary zoning
initiatives, and taking on local governments as opponents. In other cities like Cambridge,
Massachusetts and Montgomery County, Maryland, the inclusionary zoning ordinance's
genesis stemmed from the planning department itself Often times, state legislatures
mandate the provision of a certain percentage of affordable units by local governments,
while strongly urging these governments to use inclusionary zoning as the most preferred
mechanism for affordable housing production. Other times, cases brought before the
courts by developers or municipalities have resulted in court mandated inclusionary
ordinances (such as the most commonly mentioned precedent cases of Mt. Laurel I and
II). A proposed zoning ordinance will often have to go through a municipality's formal
zoning approval process, where it will have to withstand public hearings, and scrutiny by
the City Council, City Manager or Mayor, the City's planning department and/or
2
For instance, the provision would exist as an option for specific neighborhoods or zones to adopt the
ordinance specifically for their defined geographic area.
planning oversight commission, and other relevant city agencies or district governing
bodies.
B. Appropriate Policy for Addressing Affordable Housing Needs in a Community
Inclusionary zoning is considered by many local governments to support their policies of
deconcentration of poverty, and affordable housing goals. It is a low-cost way for
governments (especially in the context of today's local government deficits) to provide
affordable housing by leveraging the capital of the private market. Inclusionary zoning
also supports economic development goals by ensuring the provision of housing units
affordable for the workers of businesses considering relocating to a community.
Businesses know that having their workers live close by cuts down on long commutes,
increasing productivity. As Sheila Russell, a Councilmember in Cambridge, MA, said in
1995, "Inclusionary zoning is a compromise that I support to ensure that more housing is
closer to places of employment, social services, and public transportation; allowing
certain privileges in return for affordable housing will enable local business to prosper
while awarding residents with these advantages."30 A developer 3 1 from Montgomery
County, Maryland says, "Policemen, firemen, and teachers are some of the most common
purchasers of Moderately Priced Dwelling Units. There lives are enriched by living in a
better part of town near their work. It serves a purpose to have public servants near their
work. 3 2
Inclusionary zoning supporters argue that "when a zoning change by the public sector
increases the value of a gentrifying property, why not recapture some of that value in the
form of housing in those areas of the city that need it, instead of allowing it to be
privately capitalized... ?" However, as a New York City planner pointed out, when a
City downzones, local government doesn't have to compensate for the lower property
value, so it may be unfair to assume that developers should give back to the City when
they receive windfall from upzoning.
Developers also perceive that government is shifting its responsibilities to the private
sector and homebuilding industry if it uses inclusionary zoning. Advocates refute this,
again looking to the windfall a developer might be getting from an upzoning, and is most
certainly getting from the standard depreciation or tax incentives provided to all
developers in the United States regardless of zoning policy.
Local planning departments, such as New York City's, claim a position of laissez-faire
when it comes to inclusionary zoning. They say that the filtration process takes care of
the provision of affordable units. They claim that if lower-income units are built
specifically under an inclusionary zoning program, this will take away demand for "used"
units, and the middle- and upper-income persons won't be able to rent their units out,
Burchell, 3.
3 Richard Dubin, President of The Dubin Company, has built 7000 rental and homeownership units throughout
Maryland.
32New Century Housing, "Inclusionary Zoning: The Developer's
Perspective." InclusionaryZoning: A Viable
Solution to the Affordable Housing Crisis?New Century Housing, The Center for Housing Policy. Vol. 1, no.
2 (October 2000): 2.
33 Brower, 192-93.
30
impacting the demand for new upper-income units. An argument such as this is certainly
not applicable in hot housing markets like New York City, Boston, and Chicago. If the
filtering process has any implications in these cities, it is that of lower-income persons
living in high-priced, deteriorated units, or getting displaced altogether.
Some argue that place-based subsides are an inefficient way to provide affordable
housing, claiming that "subsidies of this sort are inherently inferior to cash transfers or
other transportable subsidies."34 Further, some think it makes more economic sense for
local government to target distressed areas with affordable housing funding rather than
focusing tax payer dollars on areas where the market is revitalizing itselt such as in
gentrifying areas. Opponents point out that inclusionary zoning benefits only a few, and
ask why government should target large amounts of funding to only a few moderateincome households.
There are also political arguments put forth by affordable housing advocates in
opposition to inclusionary zoning. These advocates say that the policy errs on the side of
being too soft, on not partnering aggressively enough with the for-profit development
community. They argue that the number of households that benefit is relatively small
compared to the need. They also criticize programs (most recently in Chicago) targeting
moderate- versus low-income persons. Most inclusionary housing programs target only
moderate-income families, and often times these families are not originally from the
gentrifying neighborhoods.
C. Appropriateness of Zoning to Impact Socioeconomic Characteristics
Opponents to inclusionary zoning claim that it is a type of social engineering, and that it
is not the role of zoning to impact the socioeconomic character of a neighborhood or city.
However, as the decision in the precedent setting case of Mt. Laurel Case reads, "it is
nonsense to single out inclusionary zoning.. .and label it 'socioeconomic' if that is meant
to imply that other aspects of zoning are not...Indeed any significant kind of zoning now
used, has a substantial socioeconomic impact and, in some cases, a socioeconomic
motivation. It would be ironic... [if inclusionary zoning was ruled out] when its need has
arisen from the socioeconomic zoning of the past that excluded it." If anything,
inclusionary zoning is appropriate to remedy overt or covert exclusionary implications of
traditional zoning, and the resulting separation and segregation of uses and people. Paul
Davidoff asks, "Ifwe can zone for parking, why can we not zone for people in our
downtown zoning ordinances?" 36 He goes on to say, "Zoning, in its modem incarnation,
is, in effect, a complex system of environmental controls...: the enigma of population
density, the ephemeral quality of life, the goal of creating a balanced integrated urban
community and the duty to address the pressing needs of the poor, homeless, and
underprivileged members of our society. On a broader level, zoning represents a
municipality's major tool in affecting its long-range goals as a pluralistic community."37
Ibid, 86.
* Mallach, 30.
36 Brower, 3.
" Ibid.
34
D. Environmental Impacts
Some worry about the increased demands on infrastructure, services, and the
environment the increased density of an inclusionary zoning bonus might create." Any
inclusionary ordinance with a density bonus should evaluate environmental impacts in a
given neighborhood. However, often times, in cases of upzoning or rezoning, an
increased density is already being proposed by a municipality, and so including
inclusionary zoning does not add density, but merely ensures that a certain percentage of
units are affordable.
Metropolitan Area Planning Council, 53.
Chapter 3: Setting the Stage for Inclusionary Zoning in New York
City
A severe housing crisis, spreading gentrification and displacement, and several Department
of City Planning upzoning and rezoning proposals set the state for the expanded application
of inclusionary zoning in New York City. New York City is known for the inability of its
housing market to provide an adequate number of units to house its more than eight million
residents. In simple economic terms, the lack of a sufficient supply of housing, paired with
an abundant demand, leads to New York City's infamous sky-high housing prices and rents.
This housing crisis is an imposition on upper-income residents, a burden on the middle class,
and a catastrophe for lower-income citizens.
Before and during the Twentieth century, the existence of a housing crisis in New York City
meant that low- and moderate-income residents lived in overcrowded, under-maintained, and
often hazardous living conditions. The segregation of impoverished and wealthy
neighborhoods, aligned with a separation of race and ethnicity, was clear and drastic. Over
the last 40 years, upper- and middle-income residents of New York City, and from all over
the world, began to gentrify traditionally lower-income and working class neighborhoods, as
the supply of housing in New York City's historically upper class neighborhoods dwindled.
The increased demand for housing in formerly blighted neighborhoods lead to profitable
development, and welcome revitalization. In Manhattan neighborhoods from Greenwich
Village, to SoHo, to Chelsea, and now Harlem, individuals, families, and developers with the
money to acquire property, and rehabilitate the housing and commercial stock (or demolish
and construct new units) into high rental or homeownership residences have changed once
neglected neighborhoods into the most trendy and expensive areas in New York City.
Gentrification has also spread to the outer boroughs, particularly Brooklyn, as neighborhood
by neighborhood housing prices and rents quadruple within just a few years. Once
affordable to groups such as city service workers, tradespersons, and teachers, Brooklyn
neighborhoods like Carroll Gardens, Cobble Hill, Park Slope, Fort Greene, Williamsburg,
and Greenpoint are gentrifying rapidly, or have already almost completely gentrified. With
the exception of a dwindling percentage of rent regulated units and a stagnating supply of
public housing, the majority of housing in these neighborhoods has become unaffordable to
many long-time residents.
Despite the many merits of gentrification discussed in Chapter 1, the displacement of lowand moderate-income New Yorkers from their homes and neighborhoods has become an
unfortunate byproduct of this phenomenon. Not surprisingly, according to the many sources
interviewed for this thesis and the research conducted, no substantial attempts to quantify, or
even rigorously qualify this gentrification, or the resulting general displacement, have been
found. One exception, a report by the Citizens Housing and Planning Council entitled
"Gentrification and Displacement", presents the results of a study conducted in New York
City, and regression analysis performed by the group.
New York City's Department of City Planning has proposed several "upzonings" or
"rezonings" 3 9 to create an incentive for even more development across the City. "Upzoning"
in general terms means the changing of zoning regulations to allow for a greater density for
new development. For example, instead of only being allowed to build a four story building,
after upzoning, a developer might be allowed to build eight stories. Because a developer can
build more on the same geographically defined land area, the land which is upzoned will
increase in value (sometimes dramatically depending upon the increase in density). The
Department of City Planning's goal in upzoning is to spur more development, the rationale
being that if it is more profitable to develop in a certain area, more developers will develop
there, adding to the housing supply and lowering overall market prices. As explained in this
chapter's Section 3. Upzoning and Rezoning, new development of housing units will most
likely not be affordable to low- and moderate-income residents of Park Slope, and may even
exacerbate displacement of long-time residents.
Chapter 3 will examine the affordable housing crisis at the New York City, Brooklyn, and
Park Slope neighborhood levels. Gentrification and displacement indicators will be
discussed, as well as the need for further quantitative research regarding these indicators.
The Department of City Planning's proposal to upzone a section of the Fourth Avenue
corridor in Park Slope, Brooklyn will be presented and discussed as a case study of a
foregone opportunity to include inclusionary zoning to mitigate displacement, and ensure the
provision of affordable housing with new development. Data tables regarding Housing
Affordability and Availability are presented for New York City, Brooklyn, and Park Slope at
the end of Chapter 3. These data are also discussed within the text, and are illustrated in
several graphs.
39
An example of rezoning would be changing from a manufacturing to a residential zone.
I. Addressing New York City's Housing Crisis
In 1985, Dwight Merriam states in the book Inclusionary Zoning Moves Downtown.
"I'm not sure that we need to identify and agree on a (housing) crisis in order to be
concerned about this problem. All we must do is recognize a need, and there certainly is
one for increased housing opportunities for low- and moderate-income families in the
central city."40 However, it is appropriate for the legitimacy of this thesis to lay a
foundation of understanding regarding the need for affordable housing in New York City
generally, Brooklyn more specifically, and most especially, the neighborhood of Park
Slope (the focus of the Department of City Planning's upzoning proposal).
A. New York City Housing Crisis
Anecdotally, most people in New York agree that they pay too much for rent, and that the
quality of their housing is far from adequate (in terms of both space and maintenance).
Housing First!, a not-for-profit umbrella and advocacy organization in New York City for
local affordable housing development corporations, suggests that "unlike previous
housing crises that have confronted the city, today's shortage affects not only low-income
New Yorkers, but moderate- and middle-income households as well."4 '
Affordability
In The New Marketplace report (December 2002), New York City's Department of
Housing, Preservation and Development, and Mayor Bloomberg's Administration assert
that "nearly half of all New Yorkers pay more than 30% of their income in rent"A2 , and
that "487,957 households, or 27.1% of all renter households pay more than 50% of their
income for rent."43 These statistics are startling, given that the generally accepted"
capacity of a household to pay for housing costs (rent or mortgage, plus utilities) is no
more than 30% of monthly income.
Housing First! explains that over the last twenty years, "rents are up, and real income is
down. Between 1981 and 1999, according to Census Bureau data, [New York City]
median rent has increased at twice the rate of inflation, while median renter household
income has stagnated for 25 years and low-income families have actually lost ground in
real terms. From 1981 to 1999, median rents (adjusted for inflation) increased by 33 %
while real median renter income increased by only 3%."45 Housing First! also cites
National Low Income Housing Coalition statistics: "a person needs to earn over $18.25
an hour working 40 hours per week to afford a two-bedroom unit at New York's "fair
market rent"- 354 percent more than the present minimum wage of $5.15 per hour.'
40
41
41
Brower, 95.
Housing First! Buildingfor the Future: New York's Affordable HousingChallenge, November 2001.
Database on-line. Available from http://www.housingfirst.net. Accessed 3 March 2003. p. 3
The City of New York (Michael R. Bloomberg, Mayor), and Department of Housing Preservation and
Development (Jerilyn Perine, Commissioner). The New Marketplace: Creating/Housingfor the Next
Generation.December, 2002. p. 3
41
Ibid, 4.
44
Department of Housing and Urban Development affordability guidelines.
Housing First! Buildingfor the Future: New York's Affordable HousingChallenge, 7.
Ibid.
4
46
Housing Availability
The lack of housing availability is evident in the extent of overcrowding in New York
City, extremely low vacancy rates, a growth in population that far exceeds the rate of
housing production, and extensive waiting lists for assisted housing.
The New Marketplace report states that "from 1996 to 1999, the number of overcrowded
families increased to 75,715, and the number of severely crowded to over 215,000
families. In addition, the number of doubled-up households increased from 203,000 in
1996 to 221,000 in 1999, an increase of 9.1%.',7
Housing First! states that "housing experts generally agree that a housing market must
have at least a 5% vacancy rate in order to provide opportunities for newcomers to find
housing and to allow existing residents to move into larger units as their families grow,
move up as their earnings increase, and downsize in their senior years."" However, "in
2000, the citywide vacancy rate for rentals was 3.2%, down from 4.1% in 1990...and it is
most severe for low-rent units: the number of vacant apartments renting for under $700
went down by almost 14% (from 1998 to 2001)..., while those renting under $400 were
reduced by 66%."49
As Michael Schill states in a New York Times Opinion piece, "between 1990 and 2000,
the number of households [in New York City] increased by 205,300. The number of new
apartments and homes went up by only 81,000.3"0 As illustrated in Graph 1: New
Housing Units vs. New Households in New York City, Brooklyn, and Park Slope 1990-
2000, the demand for new units has far exceeded supply.
47
48
49
The City of New York (Michael R. Bloomberg, Mayor), and Department of Housing Preservation and
Development (Jerilyn Perine, Commissioner), 4.
Housing First! Buildingfor the Future: New York's Affordable Housing Challenge, 5.
Ibid.
'0 Michael Schill, "More Housing on the Map," New York Times, 18 December 2002, sec. A, p. 35.
Graph 1:"
The length of waiting lists for government assisted housing units is another indicator of
the need for low-income and very low-income housing in New York City. "The typical
family will now spend eight years on the waiting list for an apartment in the City's public
housing developments. Currently 224,000 households are on the Section 8 rental voucher
52
waiting list, and 141,000 households are on the waiting lists for public housing."
B. Brooklyn Housing Crisis53
Housing Affordability
In 1999, 26.5% of Brooklyn households paid greater than fifty-percent of their income
for rent, and 22% of households had a severe housing affordability or quality problem.
While median household income in Brooklyn decreased by 4.3% over the 10 year period
from 1990 to 2000, median monthly rent increased by 9.1%. Sales prices since 1986
have shown a dramatic increase in market value for all building types, as single family
homes have increased in value 21.3%, 2-4 family homes have increased in value by
34.4%, and 5 + unit residential buildings have increased in value by an incredible 71.6%
(reflecting the ability of the owners to collect ever increasing rents).
5' Data for Graph 1 taken from: Denise Wallin, Michael H. Schill, and Glynis Daniels. State ofNew York City's
Housing and Neighborhoods2002. New York: Furman Center for Real Estate and Urban Policy, New York
University, 2002. The 10 year period used for New Housing Units issued Certificates of Occupancy was
actually 1991 to 2001, but for purposes of comparison, the dates are modified slightly in the graph. The bar
graph was constructed solely for the purposes of this thesis by the author.
52
53
Housing First! Buildingfor the Future: New York's Affordable Housing Challenge, 6.
Unless otherwise indicated, all data cited in sections B. Brooklyn Housing Crisisand C. Park Slope in
Chapter 3 of this thesis are from Denise Wallin, Michael H. Schill, and Glynis Daniels. State ofNew York
City's Housing and Neighborhoods2002. New York: Furman Center for Real Estate and Urban Policy, New
York University, 2002.
Housing Availability
The number of severely crowded households has gone up in Brooklyn from 5.6% in 1990
to 7.1% in 2000. As a testament to the inability of the supply of new housing units to
keep pace with demand, 53,408 new households settled in Brooklyn, with a mere 14,538
new units being produced (please see Graph 1: New Housing Units vs. New Households
in New York City, Brooklyn, and Park Slope 1990-2000).
C. Park Slope Housing Crisis
The same data used to illustrate the need for affordable housing in New York City and
Brooklyn cannot be presented in such a straight forward manner for Park Slope. This is
probably due to the phenomenon of gentrification, which seems to stratify data indicators,
or skews them, as the data are really reflecting two extremes of population: the relatively
lower-income, working class residents with a long tenure in the neighborhood, and the
newly arrived middle- to upper-income population who is gentrifying the neighborhood.
Housing Affordability
For Park Slope, the decrease in the statistic showing the percentage of median household
income spent for rent (from 25.9% in 1991 to 22.5% in 1999) does not reflect a decrease
in rent, or necessarily an increase in the income of long-time residents. There was
actually a 52% increase in median monthly rent in Park Slope from 1990 to 2000
($575 to $875). For repeat sales prices, data are only available for 2-4 family homes,
with a 65.7% increase in value from 1986 to 2001. The median price of a home in Park
Slope went from $287,500 in 1991 to $362,000 in 1996, and has most likely doubled in
2001. Furthermore, a staggering 56.6% increase in median household income in
Park Slope over a 10 year period surely does not reflect a drastic increase in the income
of long-time residents, and probably points to the influx of upper-income people into the
neighborhood. Please see Graphs 2 and 3 below for an illustration of the increases in
median monthly rent and median household income in Park Slope from 1990-2000.
In Wallin, Denise, Michael H. Schill, and Glynis Daniels, State ofNew York City's Housingand
Neighborhoods2002, data are labeled "Carroll Gardens/Park Slope".
5 Carl H. McCall, (State Comptroller), Brooklyn: An Economic Review, Report 1-2000. (New York: Office of
the State Deputy Comptroller for the City of New York, 21 May 1999), 26.
5
Graph 3:
Graph 2:56
Increase in Median Household Income in
Park Slope 1990-2000
increase inMedian Monthly Rent in Park Slope
1990-2000
3
$1,000 -
$50,000
$800
$40,000
$600 -1990
1
$30,000 -$20,000
0
2
$60,000
$400 -2000
$200
U2000
$10,000
$0
$0
2000
1990
Year
2000
1990
Year
It is possible that the data for the population that is being displaced in Park Slope has
been obscured by the drastically higher income data for new, upper-income residents.
However, one can still observe an affordability problem for lower-income residents, with
the statistic that 18.4% of Park Slope residents pay greater than 50% of their income in
rent.
Housing Availability
The number of households in Park Slope grew by 3,472, while there were only 283 new
housing units produced. The vacancy rate dropped from 3.4% in 1991 to an extremely
low rate of 2.2% in 1999.
Data for Graph 2 taken from: Denise Wallin, Michael H. Schill, and Glynis Daniels, State ofNew York City's
Housing and Neighborhoods2002, New York: Furman Center for Real Estate and Urban Policy, New York
University, 2002. The bar graph was constructed solely for the purposes of this thesis by the author.
"Data for Graph 3 taken from: Ibid.
56
II. Gentrification and Displacement
The New York City and Brooklyn data presented above seem not to reflect gentrification,
perhaps because the data are aggregated. The movement and scale of gentrification is most
observable at a neighborhood level, both through data and the physical change of the
neighborhood environment. Most likely data for more than a 10 year span would need to
be tracked to observe gentrification on a borough or citywide scale.
Data that can be used to indicate the occurrence of displacement as a result of gentrification
are, for the most part, not being collected by the U.S. Census, or other data collection
entities. The indicators discussed for Park Slope are useful, but there is a degree of
certainty that is not achieved using these data. For example, we can logically acknowledge
that the 56% increase in the median household income is not attributable to a deluge of
long-term residents suddenly receiving 50% increases in income, or 50% of residents
obtaining academic degrees allowing them to have such drastic pay scale increases within
10 years. However, we cannot extrapolate from these data whether the increase in median
household income is due to an influx of upper-income residents into the neighborhood, or
an extreme and rapid increase in current household income.
Tenure is a helpful indicator pointing to gentrification. For example, from 1991 to 1999,
there was a 16% decrease in the average length of tenure (years in current unit) of tenants
in Park Slope. Changes in data regarding race could also be an indicator of displacement,
however, the method used by the United States Census for categorizing race changed
significantly from the 1990 to the 2000 census, so the data are not comparable.
Given the unavailability of direct indicators for measuring displacement, it might be
possible for more advanced statistical modeling using a technique such as regression to
create new composite indicators for displacement. The indicators discussed above for Park
Slope, in addition to those reflecting changes in level of educational attainment, labor force
participation, foreclosures, etc., might lead to a clearer, quantitatively justified picture of
displacement.59 A Citizens Housing and Planning report, "Gentrification and
Displacement" 60, performed a regression analysis using indicators it thought relevant to
displacement and gentrification. The report claims the net effect of gentrification (as
CHPC measured it) is actually a slower rate of low-income persons exiting a neighborhood
when that neighborhood is gentrifying. The report points out, however, that when lowincome families do leave, it is mainly due to economic pressures.
58The
2000 census, unlike in 1990, allowed participants to identify themselves as more than one race category
in the questionnaire. This means that a person categorizing himself as Black in 1990, could have categorized
himself in 2000 as Black, Hispanic, Puerto Rican and White if he felt all of these categories represented his
heritage. This also means that the percentages of persons in the various race categories add up to well over
100%.
59 Reports that may be of some use for more data on gentrification are: Hackworth, Jason and Neil Smith. "The
Changing State of Gentrification." Journalof Economic and Social Geography. Vol. 92, no. 4 (2002):464-
477; and Hackworth, Jason. "Inner-city real estate investment, gentrification, and economic recession in New
York City." Environment and Planning.Vol. A 33, no. 5 (2001).
60 Citizens Housing and Planning Council, "Gentrification and Displacement," The Urban Prospect, Vol. 8, no.
1(January/February 2002).
Despite the lack of assembled data pointing to gentrification and displacement in New
York City neighborhoods, and specifically in Park Slope, a clear and drastic observable
change has occurred in the profile of residents, types of stores and restaurants lining the
main streets, and new construction and rehabilitation of the housing stock. The influx of
capital for the renovation of a dilapidated housing stock, the increased tax base to fund city
services, the spending power of new residents (which spurs economic development), and
the deconcentration of poverty, are all positive and desirable results of gentrification.
However, as the scale of gentrification reaches its fulcrum, and gentrification takes on a
momentum, it seems that a tipping occurs from which there is no return. As the pool of
abandoned and vacant housing in Park Slope and other gentrifying neighborhoods becomes
depleted, the financial pressures on the occupied housing stock have resulted in the
displacement of working class families. Because the housing market has become so tight,
there is little opportunity for the displaced, lower-income family to find another home in
the same neighborhood. Both residents who are voluntarily and involuntarily displaced
must leave their neighborhoods, and seek less expensive, often more dilapidated areas in
which to live.
A very precarious balance has to be reached by New York City in its residential
development policies between incentivizing redevelopment and inciting displacement. As
stated by Paul Davidoff "We have...seen the process of exclusion operating in urban
housing markets.. .too often, the revitalization of city neighborhoods fails to benefit
existing residents and frequently it leads to their displacement. It used to be the slum
bulldozer that wiped out the poor minorities from certain downtown areas that were in the
path of redevelopment, but today it is the real estate tax shelter, the condominium
conversion, local tax abatements for rehabilitation, and the discretionary zoning approval
for a high rise residential development."61 In neighborhoods like Park Slope in Brooklyn,
gentrification, and to a certain extent, displacement, have already occurred. Furthermore,
the proposed upzoning by the Department of City Planning will continue to fuel, and
exacerbate this phenomenon. Inclusionary zoning can be used to mitigate the impacts of
gentrification and displacement caused by natural market forces, and by DCP's rezoning
proposals.
61
David J.Brower, Dwight Merriam, and Philip D. Tegeler, eds, InclusionaryZoning Moves Downtown
(Chicago: American Planning Association, 1985), 3.
III. Rezoning and Upzoning
The New York City Department of City Planning is proposing to rezone a majority of the
neighborhood of Park Slope, Brooklyn. This is one of several rezonings proposed by the
City. It serves as a case study of a foregone opportunity by the City to provide affordable
housing along with increased density and profit for developers, and to mitigate the impact
of gentrification and displacement on current residents.
The Park Slope Rezoning Proposal is generally favorable to residents, community groups,
and elected officials as it will ensure that future development fits the scale of the primarily
brownstone buildings on neighborhood side streets by creating contextual zones. It will
also legally allow for commercial and retail uses along several Park Slope main streets
where these uses already exist. The controversy exists with the Department of City
Planning's proposal to increase residential density along Fourth Avenue, a main boulevard
in Park Slope. Fourth Avenue can most likely absorb the proposed greater density as it is a
wide boulevard (120 feet). The Department of City Planning believes that new
development of residential buildings with first floor retail or commercial use will most
likely follow the upzoning, providing much needed new housing in the Park Slope area.
However, the fear of many residents and affordable housing advocates is that the increase
in land value attributable to the upzoning will exacerbate the widespread gentrification of
Park Slope, and the displacement that follows.
A. ParkSlope Rezoning Proposal
The Park Slope Rezoning Proposal62 is a proposed amendment to New York City's
zoning map. This is the second phase of rezoning for Park Slope, as over 10 years ago
the area from Flatbush to Union Street was rezoned. The neighborhood of Park Slope is
located in Community Board 6, in Brooklyn, New York (see maps below). For
clarification, New York City is divided into five boroughs (Manhattan, Brooklyn, Staten
Island, Bronx, and Queens). Each borough is divided into smaller geographic entities,
called Community Districts, that are governed by Community Boards.
62
New York City Department of City Planning, ParkSlope Rezoning Proposal,New York: 2002, Database online, Available from http://www.nyc.gov/html/dcp/html/parkslope/parkslopel.html, Accessed 14 January
2002.
Map 1: New York City's Boroughs and Community Boards6 3
Community Board 6 & Park Slope
The Park Slope Rezoning Proposal consists of the rezoning of 110 blocks in Park Slope.
The Department of City Planning's stated goals for this rezoning are to "preserve the
historic scale of the brownstone neighborhoods, and provide increased opportunities for
residential and commercial development on Fourth Avenue.""4 For the purposes of this
thesis, the Fourth Avenue proposal will be explained.
The current zoning along Fourth Avenue is R6 (Residential 6) between 15*h and Union
Streets (with a commercial overlay of C2-3), and R7A between Union and Warren Streets
(with a commercial overlay of C2-4). Please see Map 2: Park Slope Existing Zoning
below. The proposed upzoning will replace both the R6 and R7A zones on Fourth
Avenue with an R8A zone, more than doubling the allowable FAR (Floor Area Ratio 6 )
for the R6 zone, and almost certainly resulting in a doubling of land value. Please see
Map 3: Park Slope Proposed Zoning'.
63
Maps assembled from various website graphics on-line.
" New York City Department of City Planning, Park Slope Rezoning Proposal.
61 Ibid.
66 Floor Area Ratio is the ratio of the allowable maximum square footage of a building relative to the lot size.
67 Ibid.
38
R100
OmM
!*a
c/I .s
E7A
c
M
'c-s
Mn
4J
ca.4
7muta
go"daf
*Z
T
Department of City Planning I Brooklyn Office 1 November 2002
3
//, c-<X
CIA4
C2-3
-4
Department of City Planning I Brooklyn Office /January 2003
40
Tables 1 and 2 below summarize the maximum Floor Area Ratio, and minimum and
maximum base and building heights for both the current zoning of Fourth Avenue, and
DCP's upzoning proposal. The maximum building height68 in the current R6 zone is 5-6
floors, while the R8A maximum building height proposed for the upzoning is 12 floors.
Table 1: Current Fourth Avenue Zoning6_9
Minimum
Zoning Maximum
Base Height
Area
District Floor
Ratio (FAR) (approx. # of
Maximum
Base Height
(approx. # of
floors)
floors)
R6
2.43
60ft. (5-6 floors)
60ft. (5-6 floors)
[R7A
4.0
40ft- (4 floors)
65ft. (6-7 floors)
C2-3
2.0
none
C24
2.0
none
'none
[none
Maximum
Building Height
(approx. # of floors)
floors)
i8011. (8 floors)
none
none
The photographs on the following two pages illustrate some of the current building
typologies and uses that can be found along the Fourth Avenue corridor in Park Slope
between 15' and Warren Streets. One can find a mix of two story commercial buildings,
three to five story townhouses and apartment buildings, and mixed use buildings on both
Fourth Avenue and the side streets.
The Park Slope Rezoning Proposal was adopted by the New York City Council on April
note is the first
3 0 *, 2003 without an inclusionary zoning amendment. Interesting to
photograph in the section above. These buildings were put up for-sale just days after the
Rezoning Proposal was adopted. The arguments of stakeholders impacting the debate
surrounding this policy decision, and the opportunities for lessons learned from the Park
Slope case study, will be discussed in Chapters 4 and 5.
6' The
R6 zone has no height limit, as it is not a contextual zone. However, given the standard lot sizes in R6
zones, and the small FAR of 2.43, almost all buildings are no higher than 5-6 floors. With the Department of
City Planning's Quality Housing Program, a maximum FAR of 3.0 is allowed.
69 Data from Tables 1 and 2 are from Park Slope Rezoning Proposaland meetings with New York City
Department of City Planning staff. They were constructed solely for the purposes of this thesis by the author,
based on the format of tables in the ParkSlope Rezoning Proposal.
42
Photographs: Fourth Avenue Building Typology and Uses
Park Slope, Brooklyn
Mixed use 3-4 story residential buildings:
Fourth Ave. between 1 4th & 15*h Streets
For Sale only days after upzoning adopted:
corner of Fourth Ave. & 15* St.
Side street townhouses adjacent to Fourth Ave.:
1l&Street between Fourth & Third Aves.
70
2 story commercial use and 4 story apartment
buildings:
Fourth Ave. between 6* & 7* Streets
All photographs taken by Gretchen Maneval on May 14, 2003.
44
Photographs: Fourth Avenue Building Typology and Uses
Park Slope, Brooklyn
Side street apartment buildings adjacent to
Fourth Ave:
Union St. between Fourth & Fifth Aves.
Gas station on Fourth Ave.:
corner of Fourth Ave. & 6h St.
New construction under current R6 Zoning:
Fourth Ave. between Carroll & President
Streets
46
B. Problems with the Park Slope Rezoning Proposal: No Affordable Units and
Displacement
Stimulating the development of new or rehabilitated housing units is vital in the climate
of a severe housing shortage in New York City, and is a meritorious goal of the
Department of City Planning's upzoning proposal. Unfortunately, if developers respond
to the upzoning, they will almost certainly not produce the much needed affordable units
desperately needed in Park Slope, or enough market-rate units to allow for the Filtration
Theory, historically relied upon by the Department, to work. The Filtration Theory
postulates that if enough high-end market residential units are built, the people that are
moving into these new units will leave vacant more affordable units for lower-income
people. It is debatable whether this approach is successful in other communities, but in
an extremely tight and high end housing market such as New York City, and specifically
in Park Slope, there is little hope that the recently vacated "affordable units": (1) are
affordable; (2) are available to moderate- and lower-income persons; (3) will be a
sufficient enough quantity given the demand; and (4) will be in adequate enough
condition to be considered decent and safe. The Filtration Theory is also usually based
on a citywide scope, and would not be useful at such a micro, neighborhood level.
The upzoning will cause a large increase in land values in Park Slope, which will most
likely lead to current land owners selling land or property to developers of high-end
housing, (especially if the property is not generating much income as is the case with
units affordable to moderate- and lower-income tenants), or taking on the rehabilitation
of the properties into higher priced units themselves. Displacement of current tenants in
these properties would be a direct result of the redevelopment of property spurred on by
this upzoning. The upzoning along Fourth Avenue might also result in secondary
displacement, where the increasing land values and new high end housing will prompt
other property owners along the side streets to raise their rents, or price of their homes, in
response to the newly formed upper-income market. In secondary displacement, current
tenants might be either forced out at lease renewal time due to an increase in rent, or
outright evicted for illegal reasons.
Table 3: Housing Need7 '
I. Housing Affordability
__
Population
No. of Households
Severely Crowded
8,008,278
3,021,588
7.5%
7,322,564
2,816,274
5.6%
105,555
47,291
3.1%
102,478
43,821
2.7%
2,465,326
880,727
7.1%
2,300,664
827,679
5.6%
2000
1990
2000
1990
2000
1990
Park Slo
Brookn
New York Ci
Households
Rent__
_
Median Household
Income
$705
$637
Median Monthly
_
_
_
$38,909
_
_
_
_
_
$38,293
Median % of
Household Income
Spent for Rent
% of Households with
Rent Greater than
50% of Income
(Year 2000)
% of Households with
a Severe Housing
Affordability or
Quality Problem
_
_
$33,509
1999
27.4%
11991
27.5%
_
_
_
_
$32,135
19.9%
New York City
____________2001
__
_
_
_
$33,897
21.5%
$875
__
_
_
_
$53,090
Park Sl
1999
28.2%
1991
1999
25.9%
22.1%
22.5%
18.4%
26.5%
23.7%
17.6%
_
Brookln
New York Ci
1991
26.6%
_
_
$575
$672
$612
__
15.9%
Brooklyn
Park Slope
2001
2001
16.7%
Repeat Sales Price
Indices
e
e
7
"
Condominiums
Single Family
107.4
117.7
106.7
121.3
Not Available
Not Available
121.8
134.4
165.7
164.5
171.6
Not Available
Homes
e
2-4 Family
Homes
e
5+ Unit
Residential
Bldgs.
Unless otherwise indicated, all data are from Denise Wallin, Michael H. Schill, and Glynis Daniels, State of
New York City's Housing and Neighborhoods2002, New York: Furman Center for Real Estate and Urban
Policy, New York University, 2002. Tables were constructed solely the purposes of this thesis by the author.
73 This decrease could be caused by upper-income people moving in to the Park Slope neighborhood.
" Shows increase in Median Home Values. "In the indices presented here, market values are expressed relative
to 1986, so a 2001 price index of 96 indicates that, on average, properties in 2001 were worth 96% of the
value they had in 1986, indicating a decline in average value." Wallin.
7
11. Housing Availability
New York City
Broo n
11991-2001
_1991-2001
94,275
New Housing Units
Park Sl
11991-2001
14,538
283
Issued Certificates of
Occupancy
I
New York Ci
1991
Vacancy rate
3.8%
Average Length of
Tenure (Years in
Current
Park Slo e
Brookn
1999
1991
1999
3.1%
3.2%
1991
1999
3.3%
3.4%
2.2%
12.3
10.6
Not
Not
Not
Not
Available
Available
Available
Available
Unit)
New York
i
Brookl n
1990
2000
1990
Park Slo
2000
1990
2000
Population
7,322,564
8,008,278
2,300,664
2,465,326
102,478
105,555
Number of
2,816,274
3,021,588
827,679
880,727
43,821
47,291
5.6%
7.5%
5.6%
7.1%
2.7%
3.1%
Households
Severely Crowded
Households
50
Chapter 4: New York City and Inclusionary Zoning
New York City's history of incentive and inclusionary zoning lays a tenuous foundation, but
just cause, for a renewed debate. Inclusionary zoning advocates in New York City say that it
is a feasible and effective mechanism for ensuring the production of both market-rate and
affordable housing, and for combating the negative externalities of gentrification. When
combined with other tax incentives, advocates maintain that development will become even
more profitable than what the market now bears. Those in opposition say they are reluctant
to use zoning for social equity purposes, and that the for-profit sector should not bear the
burden of providing a public good. A middle ground in the debate also exists as some
developers support inclusionary zoning, but require specific features. The political potency
of the stakeholder positions presented in this chapter will ultimately determine whether
inclusionary zoning is, in fact, included in New York City's collection of affordable housing
development tools.
I. The History of Inclusionary Zoning and the Inclusionary Housing
Program in New York City
In 1916, New York City adopted the first Zoning Resolution in the United States,
regulating the bulk and height of buildings, and the separation of uses by location.
However, the progressiveness of this concept faded as the first comprehensive revision of
the Resolution did not take place until 1961. Plaza incentive zoning for Manhattan
developers introduced the first use of density bonuses to promote a social good in New
York City. But, according to Jerold Kayden's 1978 cost benefit analysis, "incentive zoning
greatly exacerbated the overbuilding boom in New York City that gained momentum
throughout the late 1960's, creating the oversupply and high vacancy rates of the 1970's.
These in turn caused lower real estate tax assessments and occupancy revenues, costing the
City over $8,000,000 in 1973-1974."" Apparently, New York City's nascent attempt at
incentive zoning had offered too much of an incentive to developers relative to the City's
"return". The minimalist and uninviting design of many of the open spaces, or plazas,
adjacent to the skyscrapers was also a contributing factor to the perceived failure of the
policy. Development had soared, but at a great cost to the City, and without a quality
product for the public.
In 1983, the Pratt Institute Center for Community and Environmental Development and the
Center for Metropolitan Action at Queens College of the City University ofNew York
proposed an inclusionary zoning and housing trust fund program. These two organizations,
along with the CUNY Law School at Queens College, and the American Planning
Association, held a legal symposium on urban inclusionary zoning, brining together land
use and zoning experts from around the country. In an environment plagued with a dire
housing crisis and a population stratifying into extremes of poverty and wealth, combined
with the precedent setting Mt. Laurel cases of 1975 and 1983, the Pratt Institute and
Metropolitan Action viewed inclusionary zoning as a feasible mechanism for the provision
Kayden, 1.
of decent, safe, and affordable housing. Just as the Department of City Planning seeks new
development in the outer boroughs today, the drafters of the 1983 proposal thought that
"City policy should be aimed toward redistributing some of the development pressure to
the outer boroughs where redevelopment is desperately needed."7 5 The goals of the 1983
proposal were to zone "equally for the rich and poor,"76 encourage integrated housing
patterns, and to help mitigate the impact of displacement. The proposal mandated an as-ofright 10% set-aside of all new or substantially rehabilitated units for low- and moderateincome housing, as well as for new commercial development. In lieu of the provision of
on-site affordable units, developers could build units off-site, or contribute to a City
housing trust fund. 77 Developments already using tax abatements like 421 or J-51 were
included in the proposal. Pratt also emphasized what the 1983 proposal would not do:
propose the increase in zoning density or development rights as a means of generating
revenue, thwart development, solve the housing crisis, or require state enabling
legislation. 8
In 1983, the Pratt Institute and Metropolitan Action projected that 3000 housing units per
year would be produced given the current rate of market production, adding either 300
affordable units per year, or if every developer chose to contribute to the Housing Trust
Fund, $18 million per year in money set aside for affordable housing development.7 9 If
Pratt's predictions had been correct, in 2003, there might have been 6000 more affordable
units in New York City, or $360,000,000 (plus interest!) in a housing trust fund had the
inclusionary proposal been enacted.
With a scope much narrower than the citywide inclusionary zoning amendment proposed
for New York City in 1983, the Inclusionary Housing Program was adopted in 1987. As
stated in Sections 23-90 through 23-943 of the New York City Zoning Resolution, "in the
district indicated (R10), an Inclusionary Housing Program is established to preserve and to
promote a mixture of low- to upper-income housing within neighborhoods experiencing a
shift from mixed to upper-income housing and thus to promote the general welfare."8 0
The Inclusionary Housing Program is a voluntary, incentive based program allowing a
maximum 20% density increase (FAR increased from 10.0 to 12.0) if a developer provides
low-income housing. "For each square foot of floor area provided for lower-income
housing.. .the floor area of the development may be increased by the number of square feet
cited below:" 8'
7
Pratt Institute Center for Community and Environmental Development, and the Center for Metropolitan
Action at Queens College, inclusionaryzoning and HousingTrust Fund: A ProposalForEquitable
Development in New York City, (12 December 1983), 7.
7 Ibid, 16.
" Brower, 5.
" Pratt Institute Center for Community and Environmental Development, and the Center for Metropolitan
Action at Queens College, 8.
Ibid, 18.
80 Sec. 23-90 Inclusionary Housing, 5/21/87. New York City Zoning Resolution. Database on-line. Available
from http://www.ci.nyc.ny.us/html/dcp/pdf/zone/art02.pdf. Accessed 13 September 2002.
8" Ibid.
Table 4: Inclusionary Housin Program Density Bonuses by Type and Location of
Affordable
Housing Provide
Type and Location of Affordable Housing
Provided
On-site New Construction
On-site Substantial Rehabilitation
Off-site New Construction (private site)
Off-site New Construction (public site")
Off-site Substantial Rehabilitation (private site)
Off-site Substantial Rehabilitation (public site)
Preservation
Density Bonus per Square Foot of
Affordable Housing Produced
3.7sf
3.2sf
4.0sf
2.5sf
3.7sf
2.0sf
2.2sf
As presented in the table above, there are several options for the location and type of
affordable housing units produced in the Inclusionary Housing Program. On-site
affordable units are located in a new market development and are affordable for the life of
increased floor area, with the requirement that low-income units be equally distributed
throughout the building. Substantial rehabilitation and off-site new construction has to
occur either within same Community District, or in an adjacent Community District within
one-half mile of the development receiving the density bonus benefits. An additional
requirement for substantially rehabilitated buildings is that they have to have been vacant
for three years if they are not publicly owned. Another option for the development of
affordable units is preservation, where existing occupied residential or mixed used
buildings are rehabilitated and preserved as affordable units. The same location restrictions
apply for preservation as with substantial rehabilitation and off-site new construction, in
addition to an anti-harassment clause. These preserved units must remain affordable to
tenants in compliance with the program's affordability criteria.
According to some New York City market-rate residential developers, the Inclusionary
Housing Program is primarily used by developers of low-income housing as a financing
tool, as they transfer the inclusionary air rights they receive for the development of the
affordable units to market-rate developers for a fee. This fee is then used to develop the
affordable units, and the market-rate developer increases the density (and profit) of her
property. As noted above, the Inclusionary Air Rights can only be transferred in an RIO
zone in the same Community District, or an adjacent Community District within 2 mile of
the affordable development. Representatives from the Brooklyn Office of the NYC
Department of City Planning have said that about 500 affordable units have been produced
under this voluntary inclusionary zoning resolution. Given this track record, they have
expressed reticence at the addition of any new inclusionary zoning resolutions for the City.
2 Data
83
in Table 4 from Sec. 23-90 Inclusionary Housing, 5/21/87, New York City Zoning Resolution.
Sec. 23-90 Inclusionary Housing, 5/21/87, New York City Zoning Resolution. "Public sites are those made
available at a nominal cost."
II. A Renewed Inclusionary Zoning Debate in New York City
In an introduction to the Pratt and Metropolitan Action's 1983 Inclusionary Zoning
proposal, it was stated that "the establishment of Inclusionary Zoning requiring develoers
to make a provision for affordable housing in their plans.. .will not happen overnight.'7
Little did they know how true this statement would be, as a full twenty years later a debate
regarding the use of inclusionary zoning to provide affordable housing and combat
displacement is still alive and well. Most recently, the debate has emerged at the
neighborhood level in communities like Park Slope and Greenpoint/Williamsburg in
Brooklyn, and East Harlem in Manhattan. This debate began in the environment of a
housing crisis, and as numerous community-based affordable housing advocates began
responding to various pending proposals by the City to rezone these neighborhoods.
Community groups have witnessed extraordinarily rapid gentrification in their
neighborhoods over the last several years, and although they are in support of new
development, they fear further exacerbation of gentrification to the point where no
affordable housing exists for families who have lived in these neighborhoods for
generations. The neighborhood debates have spurred a citywide inclusionary zoning
initiative, as a coalition of affordable housing groups and City Council Members are
advocating the addition of inclusionary zoning to both New York City's discourse on
affordable housing policy, and its toolbox of affordable housing development programs.
The following section presents the debate surrounding inclusionary zoning in New York
City through the perspectives of players actively involved in this discourse. Some parties
interviewed have a well developed position on inclusionary zoning, while others are still in
the process of articulating their opinion on the matter (either for political reasons, or simply
because they became aware of the issue later than others). An important stakeholder not
represented directly in this documentation of the debate is the resident being impacted by
gentrification, rezoning, and the unaffordability of their housing. It is assumed that for the
purposes of this thesis, the resident's interest is represented by elected officials, affordable
housing advocates, and New York City government staff (albeit via differing viewpoints).
The organizational chart below shows the various stakeholders in New York City involved
in the current inclusionary zoning debate. Again, this chart is not exhaustive of all the
interested parties, but is provided to help visually frame the involved players.
84
Pratt Institute Center for Community and Environmental Development, and
the Center for Metropolitan
Action at Queens College, 1.
Chart1: NYC Stakeholdersfor InclusionaryZoning
City Planning
Commission
City Council
community
Boards
Fifth Avenue
Committee
Mayor's
Office
Dept. of
Housing
Preservation
& Develop.
Department of
City Planning
Brooklyn
Borough
President's
Office
Real Estate
Board
of New York
NYC
Development
Community
Citizens
Housing
& Planning
Council
Housing First!
Pratt Institute
for Comm. &
Environmental
Development
Moderate- &
Low-Income
Residents of
New York City
Moderate- &
Low-Income
Residents of
Brooklyn
Moderate- &
Low-Income
Residents of
Park Slope
Municipal
Art Society
56
Following a summary of the public approval process for the Park Sloge Rezoning Proposal
below will be a presentation of several of the stakeholders' thoughts on: gentrification
and New York City's housing crisis; legal, economic, social and political arguments for
and against inclusionary zoning; and the circumstances/environment in which inclusionary
zoning is successful or unsuccessful. Also presented are the stakeholders' policy
recommendations regarding inclusionary zoning for New York City in general, relative to
the current Inclusionary Housing Program in R10 zones, or for specific neighborhoods
(particularly in response to upzoning or rezoning proposals by the Department of City
Planning).
A. Uniform Land Use Review Procedure (ULURP) and the Park Slope Rezoning
Proposal
The Department of City Planning's Park Slope Rezoning Proposal, including the
upzoning proposal for Fourth Avenue, was discussed in detail in Chapter 3. The debate
surrounding the Park Slope Rezoning motivated the relevant stakeholders to articulate
their positions regarding the use of inclusionary zoning in New York City. As a case
study, the Park Slope Rezoning Proposal approval process can inform future strategies
for including inclusionary zoning in New York City.
The approval process for this DCP proposal, along with the debate on including
inclusionary zoning along Fourth Avenue, has necessarily taken on the timeline of the
Uniform Land Use Review Procedure (ULURP). The ULURP is a public review process
in New York City that provides a forum for public comment on proposed zoning
changes, and results in city government approval (or disapproval) of the proposed
changes (please see Chart 2: Uniform Land Use Review Procedure (UL URP)for Park
Slope Rezoning Proposal"). All of the DCP rezoning proposals will be required to go
through this process.
At the start of the ULURP, the application for the Department of City Planning's Park
Slope Rezoning Proposal (including the proposed upzoning of Fourth Avenue) was
certified as complete by the Department of City Planning on November 18, 2002.
Community Board 6 then had 60 days to review and comment on the application, and
held a public hearing on Dec. 19 , 2002. The Community Board made its
recommendations (in favor of the Rezoning Proposal) to the Brooklyn Borough
President's office, which had 30 days to review the plan, and submit recommendations to
the City Planning Commission. In his recommendations, Brooklyn Borough President
Marty Markowitz supported an inclusionary zoning amendment to DCP's proposal. The
City Planning Commission's Public Hearing was held on March 5*, and the Rezoning
was approved by the Commission on April 2 nd, 2003. Several City Planning
Commissioners cast dissenting votes because the Park Slope Rezoning Proposal did
" The "stakeholders' thoughts" are gleaned from individual interviews, policy briefs, position papers, letters,
and testimony to various government entities as a part of the ULURP process. Unless explicitly stated
otherwise, it is assumed that individual interview responses are representative of the organizations by whom
they are employed. All individuals interviewed (unless otherwise noted) gave the author permission to be
quoted for the purpose of this thesis.
86 ULURP timeline from New York City Department of City Planning website, New York: 2002, Database online, Available from http://www.nyc.gov/html/dep Accessed 15 November 2002.
58
Chart 2: Uniform Land Use Review Procedure(ULURP)for
Park Slope Rezoning Proposal
I
Application
Certification
by DCP
Nov. 18
I
CB 6 Public
Hearing
Dec. 19
50 &ay
City Council Review &
Plan. Comm. Public
Hearing
Adoption
March 5
City Council Subcomm.
Public Hearing
April 28
60
not include an amendment for inclusionary zoning, while others voted in favor of the
Rezoning, with the caveat that future efforts should be made by the Administration to
investigate expansion of the inclusionary housing program in New York City. The
Rezoning application next went to the New York City Council, and was subject to a
public hearing at the Zoning and Franchise Subcommittee on April 2 8 h, 2003.
During the testimony of representatives from the Department of City Planning and the
Department of Housing Preservation and Development on the Park Slope Rezoning
Proposal, the HPD representative offered $6 million of government money to develop
affordable housing along the Fourth Avenue corridor proposed for upzoning. Following
the DCP and HPD testimony, a short break was called before the public testimony was to
begin. As rumors spread during the break that a deal had been struck, it was assumed
that the $6 million had been offered in exchange for the Council Members who had
originally supported an inclusionary zoning amendment to change their position, and
support the Park Slope Rezoning without such an amendment. Most of the Council
Members on the Zoning and Franchise Subcommittee left the hearing before the public
testimony even began, as did many residents and representatives of community
organizations who had planned to testify. The City Council adopted the Park Slope
Rezoning without an inclusionary zoning amendment on April 3 0 th, 2003. The
implications of the interrupted Subcommittee public hearing, and the $6 million deal, are
discussed in Chapter 5.
The citywide inclusionary zoning debate will likely extend beyond the Park Slope
Rezoning ULURP process, as a coalition of inclusionary housing advocates around the
city will continue to target other rezoning proposals. However, the above explanation of
the Park Slope Rezoning Proposal and ULURP process is useful in providing a context
for the stakeholders' positions as they are elucidated upon in the following sections of
this thesis.
B. New York City Department of City Planning
The Department of City Planning's response to incorporating inclusionary zoning in their
proposed upzoning of Fourth Avenue has not been favorable. DCP staff continues to
speak out against any new inclusionary zoning provisions, but has not articulated an
argument against it with supporting data analyses, or qualitative research. Generally,
DCP has said that they do not support the use of zoning to address social issues, and that
the RI0 Inclusionary Housing Program would not work in the outer boroughs. In an
interview for this thesis, Sandy Hornick, Deputy Executive Director, Strategic Planning,
DCP, expresses his thoughts on gentrification and inclusionary zoning in New York City.
Hornick explains that the housing crisis in New York City is in part a supply and demand
issue: "Because population in the city is rising and housing production has not kept up,
there is a housing deficit."8 7 Hornick says that there are an enormous number of
immigrants coming into the city, primarily low-income, which exacerbates the housing
shortage. The inadequate supply relative to demand is also leading to increasing rents, in
Sandy Hornick, Deputy Executive Director, Strategic Planning, New York City Department of City Planning,
interview by Gretchen Maneval, 28 February 2003, Brooklyn, NY.
his opinion. Furthermore, he says that the construction cost per square foot is rising,
while the median income is steady, leading to overcrowding. In terms of gentrification,
Hornick believes that gentrification and displacement are occurring in specific
neighborhoods, but not in New York City as a whole, as there aren't enough affluent
people to have a citywide impact. He does not feel that generally this gentrification
involves upper-income people pushing out low-income families, but that it is a more
subtle gentrification, "$100,000 incomes being replaced by $150,000 incomes."" As a
clarification to this example, Hornick adds that he would "be more than surprised if
gentrification had no effect on low-income families."89
Legally, Hornick says any inclusionary program would have to be voluntary so that no
one challenges it based on the nexus issue. A mandatory program would never work, in
his opinion, because he says there has to be a link between the market producer and the
problem one is trying to solve. Additionally, he claims there is no cause and effect
relationship between the production of market-rate housing and the need for affordable
housing. Hornick points out that density bonuses currently used in NYC relate to what
the project causes (i.e. public space, infrastructure improvements.) Hornick adds, "This
is America, and you're entitled to make a return on your investment;" a mandatory
program takes away this right of the developer. 90 When asked about the success of
inclusionary zoning precedents around the United States, Hornick says that these
mandatory programs work because developers are so desperate to build that they will do
anything.
From an economic perspective, Hornick thinks that inclusionary zoning is inherently a
tax to get money back from the developer. It was unclear what Hornick's point of view
was in terms of looking at inclusionary zoning from a social perspective. First he says he
is "not an ideologue about this; one can use zoning where it's legal and when they think it
will solve a problem." 9 1 However, he then adds the caveat that he does not think this is a
social issue. He says that zoning policy should not be used as a method to redistribute
income. "The public sector has many other tools to use; it shouldn't mandate the private
person to solve social problems if he hasn't caused then" 92
88Ibid.
In an email sent from Gretchen Maneval to Sandy Hornick on 12 May 2003, Maneval requested that Hornick
review his quotes used in this thesis for accuracy. Hornick's clarifications and caveats to the quotes will be
referred to in the text of this section, as well as in footnotes. Hornick's clarification to this particular quote is
"However, in the neighborhoodswhere a signficant marketfor new market-rate housing has developed,
gentrificationhas long been underway, with those with the greatest assets outbidding those with lesser,
though not necessarilyinsignficant,assets. The $100,000 and $150,000 numbers were merely to represent
the process."
90 Ibid. Subsequent Hornickclarification: "The quote sounds like me but the clause thatfollows it seems to have
something missing. If I remember correctly, the quote was in response to some comment you made, perhaps
about unreasonableor excessive profits. The mere fact that complying with some law or regulationis
mandatory does not automatically deny a return. Otherwise, no regulationwould be permissible."
91Ibid. Subsequent Hornickclarification: "I am one of the co-authors of the city's inclusionaryhousing
program.
92 Ibid. Subsequent Hornick clarification: "I don't know if this is a quote but actually it's the New York courts
that said something like this. I think I was citing the courts. By the way, I also saidNew York City spends
89
Politically speaking, Hornick emphasizes that we live in a democracy and the
government does what the people want, and that most people aren't asking for
inclusionary zoning. He believes that when land use policy becomes a tax, it's not valid.
Regarding the notion that the public sector should recapture profits that private land
owners might make as a result of the proposed upzoning on Fourth Avenue, Hornick
says, "City governments downzone all the time, take away development rights, and they
don't pay landowners anything; we therefore can't hold developers responsible for giving
93
money back to us when we increase the value of the land." Subsequently, Hornick
added a caveat to the aforementioned quote: "Before advocates assert, as you did at the
City Council hearing, that local governments have the right to recapture, through zoning,
increases in value that result from zoning changes as a means to assist financially
strapped local governments in providing affordable housing, consideration should be
given to corresponding fiscal implications of compensating land owners when local
governments downzone property. Would the cost of compensating property owners for a
downzoning of 0.43 over large areas of Park Slope and recapturing some or all of the
increased value on Fourth Avenue leave the City with significant resources for
housing?" 94
The Department of City Planning has expressed that its New York City RIO Inclusionary
Housing Program has been less successful than they had hoped for. As Amanda Burden,
New York City DCP Director, was quoted in an April, 2003 New York Times article,
"Inclusionary zoning has been tried in the most dense residential zones in
Manhattan.. .but has failed to produce many moderately priced apartments." 95 However,
Hornick says that there are three real gains of the RIO program: 500 units of affordable
housing built; units are affordable in perpetuity (for life of the market property); and 2000
more market-rate units were built because of the extra density allowed. Hornick goes on
to say that the difference between a Manhattan and Park Slope inclusionary zoning
program would be that Manhattan gained both market and affordable housing, while Park
Slope would be trading market for affordable. "The (RIO) program won't work in
Brooklyn.. .there are two buildings that have been built in Brooklyn Heights where the
R10 Inclusionary Program is applicable, and neither building used the program because it
didn't make sense to them."96
Hornick stands by the Department of City Planning's argument that the Fourth Avenue
upzoning proposal will serve to dampen housing prices relative to the levels likely
more of its own fiscal resources on affordable housing issues than all the other municipalitiesin the nation
combined "
93 Ibid. Subsequent Hornick clarification: "Perhapsit would be clearer to say that: Zoning amendments do not
carry with them an obligationon the part of the government to adjust land values to compensatefor gains in
losses in value (as long as the courts hold that sufficient value remains to avoid a taking)."
94 Hornick clarification in email dated 12 May 2003 sent to Gretchen Maneval.
95 Diane Cardwell, "Highs and Lows in Park Slope Rezoning Plan", New York Times, 2 April 2003, sec. D, p. 5.
96 Hornick. Subsequent Hornick clarification: "Much of the conversation was a response to why the current
program should not be extended to FourthAvenue. The two buildings in Brooklyn Heights are merely cited
as a part ofthe evidence of why this is so."
without the upzoning: "if 1000 new units are produced because of the upzoning, prices
will go down, and if units are produced across the city (for example 20,000 per year),
then one could see a real difference in housing prices relative to the same population." 97
He does not, however, believe that the trickle down approach works for affordable
housing, as "low-income households don't support ongoing maintenance and
operation."98
Hornick says that Park Slope is desperate for housing units due to displacement and
rising costs, and that the Fifth Avenue Committee (FAC) inclusionary housing proposal 9
is really about steering subsidies into Park Slope and away from other neighborhoods
serviced by other affordable housing developers. Furthermore, he says that combining an
inclusionary program with other subsidies might work, but that there is not enough
subsidy to go around, effectively "stealing the subsidy money away from areas like
Sunset Park or Central Brooklyn. If there isn't enough subsidy money to go around, then
all developments cannot achieve the maximum FAR. This results in fewer units being
produced and fewer affluent households served by new development. These unserved
households would then be forced to compete for, and bid up the price of, the existing
housing stock."100
C. New York City Council
Council Member David Yassky
Council Member David Yassky represents District 33 in Brooklyn, including most of the
Greenpoint/Williamsburg waterfront area proposed for rezoning by the Department of
City Planning. In a November 2002 letter from David Yassky to New York City Deputy
Mayor Doctoroff, Yassky suggests that as a part of the revitalization proposal for
Greenpoint/Williamsburg waterfront, housing and open space have to be considered. The
appropriate levels of height and density for the area are also an issue. "While market-rate
units are a welcome addition to the city's depleted housing stock, most residents of
Greenpoint-Williamsburg will be unable to afford these apartments. Indeed, some argue
that development of luxury housing on the waterfront will drive up rents and housing
prices throughout the Greenpoint-Williamsburg area, forcing out low-and middle-income
families whose apartments are not subject to rent regulation."1 0 1
Zo8 Segal-Reichlin, Legislative Aide/Community Liaison for Yassky, was interviewed
for this thesis about her thoughts on gentrification in Brooklyn and the use of
inclusionary zoning in NYC as a policy tool to provide affordable housing units. SegalReichlin believes that gentrification is occurring in Brooklyn, especially in Yassky's
district, which she points out has close proximity to Manhattan, good transportation
infrastructure, and a desirable housing stock.
97 Ibid.
98
Ibid. Subsequent Hornick clarification: "I actually wrote an article on this subjectfor City
Limits back in
1983."
99 A detailed description of the Fifth Avenue Committee's inclusionary housing proposal is presented in
Chapter 4, section D. Housing Organizations, Fifth Avenue Committee.
10 Hornick. (quote includes subsequent clarification).
101 David Yassky, Letter to New York City Deputy Mayor DanielDoctoroff,November 2002.
Addressing the legality of inclusionary zoning, Segal-Reichlin argues that a nexus does
exist as new development often leads to secondary displacement at the very least, if not
direct displacement. In regards to the economic feasibility of a density bonus, she says,
"if you can build two more stories, the development costs should go down; therefore the
income that needs to be generated can be less from a certain percentage of units." 02
Segal-Reichlin emphasizes that whatever incentive program is developed, too much of a
windfall should not be received by developers. In response to the Department of City
Planning's trickle-down policy to provide affordable housing, Segal-Reichlin says,
"There is such a deficiency of affordable housing that just creating market units isn't
going to result in a trickle down of more affordable units." 03 From a social standpoint,
Segal-Reichlin asserts that a mixed economy is the most desirable for New York City
neighborhoods.
Segal-Reichlin says that from an elected official's point of view, Yassky wants to support
his constituency. She maintains that Greenpoint/Williamsburg is an example of an
environment that is perfect for the use of inclusionary zoning as "there is a core lowerincome base made up of many working class and ethnically diverse families who have
lived in the neighborhood for sixty to seventy years." 04 She says with the proposed
rezoning by DCP to change from manufacturing to residential along the waterfront, many
of the long-time residents could be in jeopardy of being forced from their homes due to
an increase in rents and property value. Segal-Reichlin also says the community doesn't
want more than four stories allowed under the rezoning, while developers have suggested
up to twenty stories. She thinks inclusionary zoning could be a good compromise, as
residents might be willing to allow more height than four stories in exchange for
developers providing affordable units.
Segal-Reichlin points out that any inclusionary zoning proposal must be structured in a
way that is profitable for developers so they will take advantage of it. It should also be
appropriate to the location where it applies she says, unlike in Manhattan where land
costs are restrictively high. She does think NYC's current Inclusionary Housing Program
has met with mild success, as 50% of new projects have taken advantage of the program,
and over 450 units of affordable housing have been created. She says another success of
the current program is that it has prompted mixed-income living within new
developments. Segal-Reichlin thinks any inclusionary zoning should be mappable, and
will work the best in areas where DCP is already proposing a change in zoning (either an
increase in density, or a change in use).
In the November 2002 letter to Deputy Mayor Doctoroff, among other policy
recommendations to produce affordable housing units (including tax incentives, tax
increment financing, and a conversion fee contributing to an affordable housing
development fund), Yassky advocates a Zoning Incentive similar to that of the current
Zo8 Segal-Reichlin, Legislative Director for Council Member David Yassky, interview by Gretchen
Maneval, 4 March 2003, Brooklyn, NY.
102
10
114
Ibid.
Ibid.
RIO zone Inclusionary Housing Program, without restrictions on using other available
incentives such as 4% tax credits.
Yassky and staff have also drafted a policy paper entitled, "Affordable Housing Zoning
Bonus." The Yassky paper is in response to the fact that "Mayor [Bloomberg] proposes
rezoning large areas of unused manufacturing land for residential use but has not put
forward plans to ensure that New Yorkers of modest means can afford to live in some of
the new developments created from these massive, city-sponsored rezoning efforts." 05
The paper goes on to explain that land zoned for residential use is more valuable than
land zoned for manufacturing, and therefore, the DCP proposed rezoning is giving a
windfall to landowners. Yassky thinks this large windfall allows flexibility to include a
voluntary program for developers to get 20% more total units if half of the additional
units are affordable to lower-income families (without the aid of government subsidy). If
an even greater percentage of units were made affordable by the developers, government
assistance to subsidize the project would be made available to them.
Yassky's position in support of inclusionary zoning did not impact the Park Slope
Rezoning Proposal, but will hopefully prove more effective in getting an Affordable
Housing Zoning Bonus included in DCP's Greenpoint/Williamsburg Rezoning Proposal.
Council Member Bill deBlasio
Council Member Bill deBlasio represents District 39 in Brooklyn, including part of the
Park Slope neighborhood. According to deBlasio, "There are a lot of good elements to
the [Park Slope Rezoning] plan and we should keep moving forward, but I think it could
be improved by explicitly creating incentives to build affordable housing." 0 6
A policy paper drafted by deBlasio and his staff entitled "A Pilot Affordable Housing
Zoning Bonus on Fourth Avenue" prescribes a strategy for incorporating affordable
housing into new developments along Fourth Avenue. The deBlasio paper proposes that
"the [City] Council immediately introduces a resolution to create the "affordable housing
zoning bonus district" on Fourth Avenue. This would be done by rezoning Fourth
Avenue to R8A, along with a simultaneous amendment to the Zoning Resolution (adding
a Section 23-146b) creating an optional provision for certain R8A districts that would
apply to the portions of Fourth Avenue covered by the Park Slope Rezoning." 07 The
current Park Slope Rezoning Proposal by DCP would have to be amended so that for the
time being, Fourth Avenue is zoned to only R7A, allowing room for an increase in
density with the future affordable housing zoning bonus. Fourth Avenue would have a
4.0 FAR as-of-right (with contextual features appropriate for wide streets), which is equal
to R7A FAR. Then, for each square foot of affordable housing included in a new
development, a developer could build an additional square foot of market-rate housing,
up to 6.02 FAR (equal to R8A) from the as-of-right R7A FAR. The Department of City
Planning, the New York City Council, or the Brooklyn Borough President could apply
for this R8A remapping and text change.
15
106
107
David Yassky, Affordable HousingZoning Bonus, 2002.
Cardwell, 5.
Bill deBlasio, A Pilot Affordable Housing Zoning Bonus Programon FourthAvenue, February 2003.
Bill deBlasio's paper suggests the zoning bonus could be used in combination with the
NYC New Marketplace initiatives, as well as the City's other current incentive and
financing programs. The paper recommends a three year pilot period, with a "sunset after
six years unless extended permanently or for a specified term through a new text
amendment of the original text amendment. If the program is not extended, the area will
automatically revert to R8A without any obligations to provide affordable housing.
During this [three year] trial period, the Council and City Planning will work together to
create and approve a citywide Affordable Housing Zoning Bonus program." The table
below presents the ratio of market to affordable units, maximum FAR, and the height of
Fourth Avenue's current zoning of R6 and proposed zoning changes in deBlasio's pilot
program.
Table 5: Summary
of Bill deBlasio Proposal'
Zoning
R6 (current zoning)
R7A (temporary
zoning)
Affordable Housing
Bonus District, no
affordable units
Affordable Housing
Bonus District,
developer utilizes 50%
Est. "Normal" Max.
Maximum FAR
Market:Affordable
Bldg. Height
Ratio
6-7 stories
3.0
100:0
8-9 stories
4.0
100:0
100:0
4.0
8-9 stories
90:10
5.0
9-10 stories
83:17
6.02
10-12 stories
of potential bonus
Affordable Housing
Bonus District,
developer utilizes
maximum bonus
Unfortunately, given the $6 million dollar deal struck with HPD, deBlasio's proposal
became moot at the New York City Council's Zoning and Franchise Subcommittee
Public Hearing.
D. Brooklyn Borough President's Office
Richard Bearak, Deputy Director of Zoning and Housing Development for the Brooklyn
Borough President, offers insight and specific policy recommendations for the
application of inclusionary zoning to New York City in a February, 2003 interview.' 09
In terms of gentrification, Bearak thinks that Brooklyn has experienced a subtle, upward
trend in income, beginning in the 1960's in Brooklyn Heights. He says that upper-
deBlasio, A Pilot Affordable Housing Zoning Bonus Program on FourthAvenue.
Richard Bearak's position does not necessarily reflect that of the Brooklyn Borough President Marty
Markowitz, although Bearak is one of the Borough President's key advisors on zoning and housing
development issues.
108
109
J
income people are moving into predominantly working class and lower-income Brooklyn
neighborhoods from both Manhattan, and more expensive neighborhoods in Brooklyn.
Looking at inclusionary zoning from an economic perspective, Bearak supports the City
finding creative ways to provide more affordable housing due to its limited resources, but
he believes it takes a certain land value to allow inclusionary zoning to work. He says the
challenge is determining the value threshold (what developers are willing to pay). He
points out that early owners of rezoned or upzoned land would make a large windfall on
the increased value of their land, but as time goes on, this windfall would become less.
Bearak is concerned that the more restrictions that are placed on the developer, the more
the purchaser will be impacted.
Bearak stresses the importance of socioeconomic diversity in neighborhoods, and of not
concentrating lower-income persons into a few neighborhoods. Diversity of workers is
also important in Bearak's point of view for the health of New York City's economy.
Politically, Bearak says that New York City government has a long policy of allowing the
market to operate laissez-faire. Furthermore, he says the "City tends to subsidize
neighborhoods where the market is not good."" 0 Therefore, the question for the city is
"should.. .they be channeling funds to areas where the market is already operating
successfully?"'"
Bearak thinks the ideal environments in which inclusionary zoning would be successful
are areas that are underbuilt, where a dramatic increase in zoning occurs, or where a
combination of the two is present. At the same time he says, "the market has to want to
go there."" 2 Bearak says that in effect, a sliding scale density bonus has existed, as the
City only has height factor zoning in some areas, and therefore if the developer builds
taller, it gives her more floor area. However, he says that most builders opt to build at
low FARs, and not take advantage of the de facto density bonus. Bearak offers
Nehemiah housing as an example of the trend of underbuilding in New York City. He
also says that often times developers can't afford the upfront costs of big projects, and so
don't maximize the building envelope, but still make an adequate profit. Bearak thinks
that the impact on displacement of units developed under a voluntary inclusionary zoning
program will be marginal, and that the income that it is financially feasible to target for
the affordable units will allow for only moderate-income families to purchase units, and
not low-income families.
E. Housing Organizations
Citizens Housing and Planning Council
The Citizens Housing and Planning Council is a nonpartisan housing policy research and
advocacy organization in New York City. Their September 2002 report, "A Proposal to
Enhance Tax and Zoning Incentives for New Housing Production," outlines
110 Richard Bearak, Deputy Director of Zoning and Housing Development for the Brooklyn Borough President,
interview by Gretchen Maneval, 31 January 2003, Brooklyn, NY.
"
Ibid.
112
Ibid.
recommendations for more effective, and perhaps combined use of New York City's
421 a tax exemption" 3 and Inclusionary Housing Program to produce affordable housing.
Frank Braconi, CHPC Executive Director, and Martha Galvez, Policy Analyst, provide
insight on their views of gentrification, and inclusionary zoning as a policy for providing
affordable housing.
In an interview with Frank Braconi, he says that he does believe gentrification is
occurring in New York City, but that gentrification brings "economic vitality to a
community. I would much rather be in urban environments of gentrification."" 4 Braconi
adds that displacement can be an adverse side effect of gentrification, but that it is not
inherently a part of it. "When an urban neighborhood has a shift in socioeconomic state,
either people can be displaced or the whole community can be lifted up."'" Braconi
believes that with a rent regulated housing stock, and no more urban renewal policies,
direct displacement in New York City is a thing of the past. He says now there is mostly
secondary displacement caused by rising rents, but that rent regulation mitigates this
trend. Based on the CHPC study and report "Gentrification and Displacement", Braconi
says that the net effect of gentrification as CHPC measured it is a slower rate of lowincome persons exiting from a neighborhood when that neighborhood is gentrifying.
However, he says when low-income families do leave, economic pressures are the main
reason. According to Braconi, the report shows that while economic pressures in
gentrifying neighborhoods may increase variables like rising rents, other variables lesson
pressures for people leaving, such as a decrease in crime and deterioration of buildings,
as well as an improvement of services.
Legally, Braconi says that there should not be a problem with an inclusionary zoning
program if a bonus is offered to developers who include affordable units. For economic
viability, Braconi thinks any program has to offer a density increase, or it will be "just
another social requirement put on the producer.""16 Martha Galvez offers that one should
look at whether the density bonus cancels out the lost income from producing affordable
versus market-rate units. Galvez emphasizes that an inclusionary housing bonus might
become a moot point if someone does not figure out why developers aren't building to
the maximum envelope in many parts of the city.
Braconi stresses that inclusionary zoning is never going to be the primary tool for
promoting diversity, but that it can play a role. "Part of the appeal of dense urban
neighborhoods is diversity, and development policy should deliberately plan for this
"This program [421 a] offers automatic property tax exemptions for up to 25 years for all new multi-family
housing built in the outer boroughs and parts of Manhattan. It also offers tax exemptions for new residential
buildings built in prime Manhattan locations if low-income apartments are incorporated into the project or
financed off-site." Citizens Housing and Planning Council, A Proposalto Enhance Tax and Zoning
Incentivesfor New Housing Production, September 2002: p. 2.
114 Frank Braconi, Citizens Housing and Planning Council Executive Director, interview by Gretchen Maneval,
13 February 2003, New York, NY.
"3
"1 Ibid.
116
Ibid.
diversity. The social environment of creativity and culture is what cities are selling
today, and they have to provide an environment conducive to these values."" 7
Braconi thinks that inclusionary zoning is a tool to direct density for the enhancement of
civic life, not the deterioration of it. He says that one of the problems in New York City
is that because communities are unwilling to accept density "where it should be, density
explodes in neighborhoods where it can be. This has led to thousands of families living
in buildings illegally and in overcrowded conditions."" 8 Braconi believes that
communities don't want more density in general, so that when rezoning or development
actions are going through the political process, applying inclusionary zoning to provide
affordable units can encourage communities to accept more density.
The Citizens Housing and Planning Council 2002 policy paper, "A Proposal to Enhance
Tax and Zoning Incentives for New Housing Production" was written in the context of
what CHPC deems to be low levels of new construction in the 1990's ("8,250 units per
year"), combined with a growing population, which have lead to increased housing prices
and "illegal and substandard dwellings." 119 The report reviews the RI0 Inclusionary
Housing Program, and recommends several changes, including its expansion to R6, R7,
and R8 zones, with a maximum FAR bonus of 20% (for both residential and commercial
buildings), in exchange for the provision of affordable units. CHPC suggests adjusting
bonus formulas so developers can combine low- and moderate-income units in a way that
allows them to maximize the FAR bonus. Other suggestions include allowing developers
to cluster affordable units in a building to maximize the market value of the density
bonus, and permitting entities other than non-profits to manage the affordable units.
Financial recommendations include removing "the restriction barring developments
receiving real estate tax exemptions or operating assistance from receiving Inclusionary
Housing floor area bonuses," 20 and allowing affordable unit rents to pay debt service for
the new development. In a May 2003 presentation to Hunter College graduate students,
Braconi suggested that it seems as if the elements in New York City's current
Inclusionary Housing Program were purposefully structured in a way that inhibits the
success of the program.
In addition to the specific policy recommendations of the Citizens Housing and Planning
Council listed above, Braconi believes that there should be selective mapping of
inclusionary zoning because there exists in New York City a diversity of markets, and he
says different neighborhoods have different capacities to support the policy. Galvez
concurs, saying that it would be politically impossible to do a "blanket inclusionary
zoning policy."' 2 ' Related to the above argument regarding density, Braconi thinks a
great opportunity to use inclusionary zoning lies with the rezoning proposal of the
"~Ibid.
"" Ibid.
Citizens Housing and Planning Council, A Proposalto Enhance Tax and Zoning Incentivesfor New Housing
Production,. September 2002: p. 2.
120 Citizens Housing and Planning Council,
4.
121 Martha Galvez, Citizens Housing and Planning Council Policy Analyst, interview by Gretchen
Maneval, 13
February 2003, New York, NY.
119
industrial areas of West Brooklyn. Galvez also suggests having communities push
through an inclusionary type program with their 197a Comprehensive Plans.
Fifth Avenue Committee
As rumors of the Department of City Planning's proposal to upzone the Fourth Avenue
corridor in Park Slope between Warren and 15* Streets spread during the summer of
2002, community organizations began to reflect on the impact such an upzoning might
have on low- and moderate-income residents. The Fifth Avenue Committee, a
community development corporation established in 1978 that builds and manages
affordable housing in Park Slope, became concerned about the burden of an increase in
rents, and the displacement that might occur as a result of the proposed upzoning in this
already gentrifying neighborhood. Working with the Pratt Institute Center for
Community and Environmental Development, Jaye Fox of Jaye Fox Consulting, staff
from the Brooklyn Borough President's office, and Council Members Yassky and
deBlasio and their staff, the Fifth Avenue Committee drafted several options and
strategies for including inclusionary zoning either as a part of, or subsequent to, the
upzoning of Fourth Avenue in Park Slope. Viewing the Fourth Avenue proposal as an
opportunity for setting a citywide precedent for inclusionary zoning, the Fifth Avenue
Committee has also reached out to citywide organizations, stimulating the larger New
York City debate.
Throughout the ULURP process, the Fifth Avenue Committee, working in combination
with aforementioned groups, has presented the status of affordable housing need and
displacement in Park Slope, researched inclusionary zoning precedents from around the
country, and architecturally and financially modeled possible inclusionary zoning
scenarios.
The Fifth Avenue Committee is concerned that the negative implications of
gentrification, including displacement, that are already occurring in Park Slope will be
exacerbated and accelerated as the result of the proposed upzoning of Fourth Avenue by
the Department of City Planning. FAC believes that the upzoning will encourage
primary displacement due to site assembly by developers. FAC says that after developers
assemble sites, they could easily demolish small buildings not subject to rent regulation
by evicting tenants, or simply raising rents, forcing tenants to leave. For larger buildings
subject to rent regulation, buyouts 2 2 and harassment of tenants might occur as has been
witnessed by FAC through their work with the Park Slope community. Furthermore,
FAC estimates that the market rent for new units built in response to the upzoning would
be approximately "$1800.. .for a two-bedroom apartment, and $2100 for a threebedroom. To afford the $1800 for a two-bedroom apartment, a family would need to
earn $72,000 per year. However, the median income of tenants in Community Board Six
is less than $30,000 per year. Fewer than 25% of current community residents would be
able to afford the new housing." 2 3 According to FAC, secondary displacement will most
likely also occur as the market commands higher rents and prices for new property, and
A tenant buyout is when a landlord or owner offers a tenant a certain amount of money to leave the
apartment. For example, the owner might offer the tenant $5000, which can seem like a large sum to a lowincome person, but is a small sum relative to the owner or developer's budget. The sum is rarely enough for
the tenant to afford a new apartment, and often leaves the person or family homeless.
m Fifth Avenue Committee, EncouragingAffordable Housing Through InclusionaryZoning in Park Slope,
Brooklyn, November 2002: p. 4.
122
Fourth Avenue becomes an attractive place for upper- and middle-income people to live.
Rent on the side streets adjacent to Fourth Avenue will likely rise, either forcing families
to pay an even higher percentage of their incomes for rent, or to outright leave their
homes.
Brad Lander, Executive Director of the Fifth Avenue Committee believes that
inclusionary zoning is a "cost effective, economically viable way to provide affordable
housing."' 2 4 He points out that in the case of Fourth Avenue, where landowners are
already receiving a substantial windfall from the upzoning, inclusionary zoning is an
especially reasonable option.
Lander does emphasize the importance of the Department of City Housing's upzoning
goal to provide as much density as possible, allowing the market to produce more
housing. In his opinion, any inclusionary zoning provision would have to ensure that it
wouldn't inhibit development. However, he thinks the Department of City Planning's
laissez-faire policy for the provision of affordable housing is not a sound strategy, and
that it is really ideology rather than economic thinking that is driving their position. Joan
Byron of the Pratt Institute says the City's supply-side argument needs to be countered
with "the case that just upzoning will probably escalate the prices of existing housing in
the area, and will not add enough units to change the arithmetic of supply and demand. If
upzoning is to avoid hurting people who need affordable housing, affirmative steps must
be taken to encourage the creation of new affordable units." 25 Lander adds that if
integrated and diverse communities are something that we as a society and residents of
New York City value, than we cannot rely on the markets to bear this out.
When speaking to the political viability of an inclusionary zoning ordinance, Lander
thinks that a voluntary program would work the best because if communities want to use
it, they can take advantage of the program, but if it doesn't make sense for the specific
neighborhood or district, they can disregard it. Lander says a mandatory program that is
mappable, while still viable politically, would also allow for a community to decide its
own vision of its future housing stock. Lander cautions that having a mandatory program
applicable to all of New York City would be difficult to achieve politically.
According to Lander, some New York City elected officials are claiming that zoning
should not be used for social purposes. He adds that Deputy Mayor Doctoroff and Mayor
Bloomberg have a vision of the waterfront that includes creating high property values.
They are apparently depending on an increased tax base resulting from market-rate
development to provide funding for City programs that subsidize affordable housing
development.
Lander suggests that the following environment is appropriate for the advancement of an
inclusionary zoning program: a strong market so that market-rate units are profitable
enough to support the affordable units in a new development; rezoning that provides a
124Brad
Lander, Fifth Avenue Committee Executive Director, interview by Gretchen Maneval, 20 February
2003, Brooklyn, NY.
125 Email message from Joan Byron (Pratt Institute) to Brad Lander (Fifth Avenue Committee) 12 August
2002.
sufficient profit margin for developers; a strong voice for diverse communities; and the
existence of a housing crisis. At this time, many neighborhoods in New York City could
claim these characteristics.
Ideally, Lander thinks the best version of a citywide inclusionary housing program would
have a unit threshold above which the inclusion of affordable housing would be
mandatory in new developments. Such a mechanism would be more equitable as it
would apply to every developer, but it would also mean upzoning most of NYC by 20%,
which would not be politically practical. Lander emphasizes that the environmental
impacts would have to be examined and neighborhood opinion carefully considered with
such a program. The next best option would be to apply the existing Inclusionary
Housing Program to zones R6 through R9 citywide, with a voluntary bonus provision,
and to allow the program to be combined with city tax incentive and abatement programs
(unlike the current RIO version). He says that "unfortunately, the current inclusionary
zoning program is not only inapplicable outside of Manhattan, it also creates a bad
precedent for thinking about models elsewhere in New York City."1 2 6
A 90/10 inclusionary model proposed by Council Member Yassky and his staff would be
good for homeownership, Lander says, as there are no other financial incentives to build
affordable for-sale units. He also cites a sliding scale model put forth by Brooklyn
Borough President staff. Lander prefers a general 20% density bonus for 20%
affordability model because it is clear for everyone involved, including architects. He
believes that almost every developer would opt for the 20% density bonus, and would
combine this with tax-exempt bond financing at 4%.
The Fifth Avenue Committee's inclusionary zoning proposal for Fourth Avenue in
response to the Department of City Planning's upzoning "is paying heed to political
palatability while ensuring the production of affordable units."
FAC supports the
general upzoning, because Lander believes Fourth Avenue can support increased density,
and says the production of more housing units is always welcome. However, the Fifth
Avenue Committee is urging the Department of City Planning not to give an outright
windfall that more than doubles the value of property for landowners, without ensuring
that developers provide affordable units in their new residential developments. FAC
estimates six "soft sites" (sites that could be more easily assembled and demolished for
new construction) along the section of Fourth Avenue proposed for upzoning. Lander
asserts that "if new buildings on these sites contained an average of 75 units, there could
be 450 new units of housing created in the next 5-10 years." 2 8
During the first six months of the Park Slope Rezoning ULURP process, the Fifth
Avenue Committee put forth two variations of what they call an "Affordable Housing
Bonus" proposal. The strategy of the initial proposal was to "amend the NYC Zoning
Fifth Avenue Committee, EncouragingAffordable Housing Through Inclusionary
Zoning in Park Slope,
Brooklyn, 5.
127 Lander.
128 Fifth Avenue Committee, EncouragingAffordable Housing
Through Inclusionary Zoning in Park Slope,
Brooklyn, 4.
126
Resolution to create "R8-I", a general residence district providing an incentive to
developers to create affordable housing, and to map this zoning district on Fourth Avenue
in Brooklyn, as part of the NYC Department of City Planning's proposal for rezoning
Park Slope."1 2 9 FAC's November 2002 Policy Brief explains that "R-81 meets the two
critical tests for an affordable housing bonus: (1) the base as-of-right zoning would be
substantially more profitable than what currently exists; and (2) the market incentives to
create affordable units are strong enough that a market driven developer would choose to
utilize the density bonus available through inclusionary zoning." 3 0 FAC's R8-I zone
would allow the same density as the Department of City Planning's proposed R8A
upzoning if a developer agreed that at least 20% of the new units would be affordable.
The base FAR for the R8-I zone would be 5.0, equal to an R7A FAR, and more than
double the current R6 maximum of a 2.43 FAR. If the developer sets aside 20% of her
units as affordable, she would get a 20% density bonus up to a 6.02 FAR, or the R8A that
DCP is currently proposing.
Table 6: Current R6 and Proposed R8-I FAR and Building Height'3
Est. "Normal" Maximum
Maximum FAR
Zone
Building Height
R6 (current zoning)
R8-I base (no afford. hsg.)
Equivalent of R7A
R8-I bonus (20% affordable)
2.43
5.0
5-6 stories
8-9 stories
6.02
12 stories
Equivalent of R8A
FAC maintains that under the R8-I zone, "in the best-case scenario, the full 450 units
would be created [due to the upzoning of Fourth Avenue], with 90 affordable units for
low- to moderate-income families. If only half of developers choose to utilize the
inclusionary zoning, there would still be 405 total units, with 45 of them affordable." 3 2
Unlike the Inclusionary Housing Program in Manhattan, FAC says the R8-I zone would
allow developers to use existing tax credits and tax-exempt bond financing, creating a
financially viable incentive to attract development. All affordable units developed would
necessarily be on-site, without the option of contributing to a housing trust fund due to
the scarcity of developable land. The "specific FAR, height, parking, opens space and
setback requirements... for the base and bonus zoning" 3 3 would have to be determined.
According to FAC, the Department of City Planning has voiced concern over the scarcity
of affordable housing resources, and the potential for developers in the R8-I zone to
monopolize resources, taking them away from other areas of the city. FAC counters,
Fifth Avenue Committee, EncouragingAffordable Housing Through Inclusionary Zoning in ParkSlope,
Brooklyn, 1.
130 Fifth Avenue Committee, Testimony to the Brooklyn Borough Board andBorough President
Regarding the
Park Slope Rezoning, 16 January 2002: p. 6.
13 Fifth Avenue Committee, EncouragingAffordable Housing Through
Inclusionary Zoning in Park Slope,
Brooklyn, 6.
132
Ibid, 9.
133 Ibid,
10.
129
"The financial incentives projected for use here [4% tax credits and tax-exempt bond
financing] are not extremely scarce or competitive. They are available for most projects
where developers seek to utilize them (unlike other City and State programs which are
more competitive). In addition, there are a relatively small number of potential
development sites in the area, so it is difficult to imagine these developments
monopolizing resources. Finally, once R8-I is created, other communities would be
4
welcome to adopt it if they wish to create more incentives for affordable housing." 3
As the ULURP process moved forward, FAC modified its proposal to make it more
politically palatable and to accommodate the broader Park Slope Rezoning. The new
proposal recommends amending the current Department of City Planning Fourth Avenue
proposal to upzone to R7A instead of R8A, leaving an opportunity for the Brooklyn
Borough President or City Council to introduce a new zoning amendment, creating an
"affordable housing bonus" district along Fourth Avenue.135 As Brad Lander states in a
February 2003 interview, "We're not ready for the details of crafting an ordinance yet.
Once we get R7A, we can sit down with all the players and come up with a model. This
allows City Council to move forward with broader legislation regarding the contextual
rezoning for Park Slope."136 FAC says that if the Department of City Planning R8A
upzoning is approved, then there will be no margin for a future inclusionary bonus
program, as anything higher than 12 stories would not be acceptable to the community.
FAC argues that R7A is a 33% FAR increase, and therefore a 33% property value
increase, over what exists now (R7A allows 8 or 9 stories as-of-right). In response to
DCP's anxiety that developers will not build in Park Slope if the as-of-right is only R7A,
FAC points out that there are already three larger scale residential and mixed-use
developments in construction along Fourth Avenue even with only an R6 zone
(maximum 2.43 FAR).
FAC says the affordable housing bonus proposed by the Brooklyn Borough President or
City Council could (1) apply only to Fourth Avenue by introducing a new zoning
amendment without a new zone or using a special district through Section 23-146 of the
Zoning Resolution; or (2) be mappable citywide. Either way, the bonus would grant
developers one additional square foot of market-rate housing for each square foot of
affordable housing. Again, developers would most likely combine the bonus with taxexempt bond financing and the 4% Low Income Housing Tax Credit. FAC points out
that "the Department [of City Planning] calls it "double-dipping" to utilize both a zoning
bonus and financial incentives. Yet when the City combines its tax levy funds with
federal HOME dollars, plus a 421a tax exemption and housing tax credits, we call it
leveraging and we are rightly proud of it. Combining financial and zoning incentives is
exactly what we should do in order to leverage scarce resources to create affordable
housing." 3 7 To the disappointment of the Fifth Avenue Committee, the deal struck
Ibid.
' Fifth Avenue Committee, Testimony to the Brooklyn Borough Board and Borough PresidentRegardingthe
Park Slope Rezoning.
136 Lander.
' Fifth Avenue Committee, Testimony on the Park Slope Rezoning to the New York City Planning
Commission, 5 March 2003: p. 4.
14
between City Council and HPD at the Zoning and Franchise Subcommittee Public
Hearing on the Park Slope Rezoning Proposal in April 2003 effectively stopped their
inclusionary zoning proposals to incent the development of affordable housing on Fourth
Avenue.
Housing First!
Housing First! is an umbrella advocacy organization with a membership of citywide and
local organizations involved in the financing, production and management of affordable
housing in New York City. Housing First!'s mission is to "elevate the issue of affordable
housing for all New Yorkers to the top of the civic agenda, through forums and public
events, reports, [and] media outreach." 38
According to Housing First!, the "severe and growing shortage of affordable housing
... [has] already impacted New York in myriad ways, increasing homelessness, forcing
middle class families to abandon the city, and complicating the ability of employers
[corporations, non-profits, and public agencies] to attract qualified employees." 39
Housing First! recognizes inclusionary zoning as "a state-of-the-art tool for encouraging
affordable housing development in cities facing severe housing shortages."14 It points
out that over 100 communities around the United States have implemented inclusionary
zoning ordinances. Of greatest interest to New York City are the programs that have
been implemented in San Francisco and Boston because of their comparability with New
York City in terms of high land values and construction costs. "Housing First!
encourages the expansion and reinvigoration of the existing Inclusionary Housing
Program to allow it to be applied to developments in medium-density districts in the outer
boroughs, or to be linked to specific rezoning efforts."141
Housing First! emphasizes the ability of inclusionary zoning to facilitate Mayor
Bloomberg's goal for New York City to develop 65,000 new housing units over the next
five years, and its compatibility with the Department of City Planning's vision of "mixeduse, mixed-income waterfront communities."1 42 According to Housing First!, the
expansion and revision of the Inclusionary Housing Program will stimulate the
production of both market-rate and affordable housing by: (1) providing affordable units
in exchange for increased density, maximizing the buildable space in New York City; (2)
presenting more opportunities for tax credit and tax-exempt financing; (3) offering
"communities and developers.. .a mechanism to provide affordable and middle-income
housing in gentrifying areas"; and (4) giving DCP and communities the chance to
thoughtfully plan and address the potential impact of rezoning by encouraging the
development of affordable units. 143
Housing First! Web Page on-line, Available from http://www.housingfirst.net/, Accessed 3 March 2003.
39 Housing First! Buildingfor the Future: New York's Affordable Housing Challenge, 2.
14*Housing First! New Tools to Promote Development ofAffordable Housing in New York City:
Inclusionary
Zoning, Draft Policy Statement, March 2003.
141 Ibid.
142 Ibid.
143 Ibid.
138
F. Developers
The development community is perhaps one of the most important players in New York
City's inclusionary zoning debate. Ultimately, the success of any voluntary inclusionary
zoning policy will be decided by whether or not developers think it is profitable for them
to put the policy into practice. Given New York City's extraordinarily high construction
costs and land values, many developers argue that including affordable units in their new
developments, with or without a density bonus, is just not financially feasible. Other
developers support inclusionary zoning, but only if some specific program criteria are
present, such as the option to build affordable units off-site.
Michael Slattery
Michael Slattery 4 4 , Vice President for Research at the Real Estate Board of New York
(REBNY), believes that gentrification and displacement are occurring in New York City,
but feels as though they are simply a function of housing demand and supply. Slattery
supports inclusionary zoning, and thinks it's "a good housing resource for a deserving
population."145 Slattery says that the premise to create economically diverse
neighborhoods (meaning one neighborhood is low-income, another is upper-income)
citywide is good, but that diversity is not feasible within a single neighborhood. Slattery
asserts, "It is a burden to market-rate areas to have affordable units; it burdens their
services with no benefit to them."14 6 At odds with the previous statement, Slattery says
he is opposed to concentrating market and low-income units, and that there should be
quotas for low-income or market-rate units per neighborhood. He says the strong
housing market in NYC is a good factor for the success of inclusionary zoning.
However, he adds that the strong market also makes it difficult to find land with low
value to place the affordable units on. Slattery states, "Clearly low-income units should
go in low-income neighborhoods next to city services such as power plants, transit
services, and utility plants like conEdison because there are lower land costs in these
areas." 14 7
Slattery does not think affordable units need to be built in the same development or
neighborhood where the market-rate housing is built under an inclusionary program.
Further, he says that market and inclusionary units cannot coexist in the same
development in a financially feasible way, and that no market site can generate enough
income to support inclusionary units on-site. Referring to New York City's current
Inclusionary Housing Program, Slattery says the geographic area where developers can
build the off-site affordable units has been too limited. "The problem with the current
geographic boundary is that developers typically can't find a site within the boundary
because land costs are too prohibitive. The entire city is the beneficiary [of the affordable
units being built], and therefore the boundaries should extend beyond the Community
Michael Slattery and Jay Seiden, two figures who have been involved with the New York City development
community for many years, were interviewed for the purpose of writing this thesis. However, they certainly
cannot represent the views of the entire development community. Efforts should be made to include
developers in New York City's discourse on inclusionary zoning.
145 Michael Slattery, Vice President for Research at the Real Estate Board of New York, interview by Gretchen
Maneval, 28 February 2003, Brooklyn, NY.
144
146
Ibid.
147
Ibid.
Boards." However, politically, he thinks it would also be difficult to build the affordable
units off-site as some low-income neighborhoods wouldn't want more low-income
housing in addition to what they already have.
Generally, he does think the voluntary IHP program has been successful, and he would
like to see it expanded into other New York City boroughs and zones if it is economically
viable. Slattery emphasizes that the current inclusionary zoning in Manhattan works
because of the 80/20 program. Furthermore, he says "This works [the 80/20 program]
because these market areas [in Manhattan] are so strong that the market-rate units can
support the production of the low-income units, and over time the low-income units
become market-rate so the developer makes a profit."148
Slattery does point out that the Inclusionary Housing Program in R1O has not produced
many units, and that people should realize that it is a neighborhood integration program
and not a production program. He adds that inclusionary zoning is just another
government imposed cost, like sprinkler and handicap accessibility requirements, that
increases developer's costs, which in turn leads to an increase in the price of market-rate
units. Slattery says the City should look beyond programs like inclusionary zoning, and
begin "tackling government requirements that increase cost and impede production" to
alleviate the housing crisis.
Slattery does think that inclusionary zoning provides a good opportunity to build more
housing, and that because the burden is on the private sector, the units will be built in an
efficient and timely manner.
Jay Seiden
Jay Seiden, an attorney who works with developers in New York City to help maneuver
them through the process of acquiring inclusionary air rights, is an advocate of
inclusionary zoning. He is a member of the Housing Committee of The Real Estate
Board of New York, as well as a member of the Executive Board of the New York State
Association for Affordable Housing (NYSAFAH). Seiden believes there should be a
coalition between developers and inclusionary zoning advocates, as he says both forprofit and affordable housing developers need to have a relationship of reciprocity for the
current Inclusionary Housing Program to function. Seiden says that generally what
happens is that an affordable housing developer will sell her air rights to a for-profit
developer, using the proceeds to develop the affordable units off-site. Seiden claims that
the only time a for-profit developer would develop affordable units independently is if
she is developing those units on-site. He also points out that one difficulty of the current
program is that it is sometimes hard for for-profits and affordable developers to find each
other.
Seiden cites several problems with developers including the affordable units on-site.
First, he says placing affordable units on-site makes it challenging to sell the market
units, and difficult to structure a condominium plan due to the required dispersing of
affordable units within the development. Seiden also indicates that it is too expensive to
148
Ibid.
develop the affordable units on-site. He believes the resale restrictions on affordable forsale units will affect the resale of the rest of the property. Seiden does support the
affordable units staying so in perpetuity. Finally, in terms of height limits, Seiden
suggests, "Why not go to RIO? Height is not a bad idea!" 14 9
The opinions on gentrification and inclusionary zoning presented above provide a
snapshot of the current debate in New York City. Given the time constraints of this
thesis, there were limits to the number of interviews that could be conducted, the policy
briefs and position papers that could be reviewed, as well as the range of perspectives that
could be incorporated. Future research regarding inclusionary zoning in New York City
should canvas a much broader range of stakeholders, as well as allow for more in-depth
research into each stakeholder's position. Chapter 5 provides a synthesis of stakeholder
positions, policy recommendations, and strategies to maneuver through New York City's
political landscape.
149
Jay Seiden, Partner, Seiden & Schein, P.C. Attorneys at Law, interview by Gretchen Maneval, 27 February
2003, Brooklyn, NY.
Chapter 5: Inclusionary Zoning Policy Options and Strategies in
the New York City Housing Environment
As stated in the Thesis Introduction, the goal of this thesis is to lay the foundation for a more
informed discourse on including inclusionary zoning as a mechanism for creating affordable
housing in New York City. An unexpected result of writing this thesis was the discovery of
the great influence of politics and ideology on the New York City inclusionary zoning
debate. While the infusion of dollars and the resulting revitalization in New York City's
gentrifying neighborhoods is a welcome change to the white flight of previous decades, it is
imperative that the City and its constituents are aware of the housing product that is being
produced by this investment, and for whom it is being built. Inclusionary zoning, when
combined with other incentives, is a viable option for New York City government to
stimulate the production of both market-rate and affordable housing for its residents. A
summary of New York City's housing environment and the legal, economic, social and
political arguments are presented below. Recommendations for the elements of a New York
City inclusionary zoning policy are outlined. Next steps for future research and
policymaking are also discussed, including a strategy to address the political and ideological
barriers in New York City's inclusionary zoning debate.
I. Ideal Housing Environment in New York City for Inclusionary Zoning
New York City boasts, for better or for worse, an ideal environment conducive to the
application of inclusionary zoning for the production of affordable housing. A strong
housing market, severe housing crisis, growing gentrification and displacement, and the
Department of City Planning's rezoning proposals, set the stage for the successful
application of an inclusionary zoning program,
New York City's aggressive housing market has seen a continued demand for housing at
ever increasing prices and rents over the last twenty years, particularly in specific
neighborhoods. However, high construction and land costs have kept the supply of housing
from meeting demand. An allowance for increased density for market-rate housing
production, combined with an inclusionary zoning program providing for a set-aside of
affordable units, would ensure a mix of housing for families of all income levels. An
inclusionary zoning program would work especially well in some neighborhoods in the
outer boroughs where the housing market is just as hot as in Manhattan, and land costs are
even lower, addressing one of the difficulties developers point to with New York City's
current Inclusionary Housing Program.
New York City continues to be plagued with a housing crisis. Most affected by this crisis
are moderate- and low-income families, almost all of whom are paying at least 30% of their
income for rent, and many of whom are paying upwards of 50% and 60%. Rents and
housing prices continue to rise exponentially, while incomes remain paralyzed by the ailing
economy and staggering deficits. A growing population year after year that far exceeds the
rate of housing production, an increasing number of overcrowded units, and some of the
lowest vacancy rates in the country, make availability of housing in New York City a major
issue. These housing crisis statistics demonstrate that the reliance of the Department of
City Planning on the market to provide enough housing to induce a filtering effect for
lower-income residents is not working. An infusion of market-rate units spurred by DCP's
proposed upzoning/rezoning changes will also not impact supply to such a degree that
prices will come down; the housing market in New York City is just too tight.
Gentrification and displacement at the neighborhood level in New York City necessitate
the involvement of government to mitigate their effects on long-time, working class,
residents, especially when government policies such as rezoning exacerbate these trends.
The deconcentration of poverty in New York City neighborhoods that gentrification brings
about should be taken advantage of by holding it steady, instead of letting it tip a
neighborhood concentrated with poverty into one concentrated with wealth. As upperincome residents move into historically middle and working class neighborhoods, they are
providing a market for landlords and owners to ask for and receive increased rents and
housing prices. Moderate- and lower-income families cannot compete with the wallets of
the rich, and so will either end up paying an unbearable percentage of their income for rent,
or be forced to leave the neighborhood. Furthermore, the rents and prices in gentrifying
neighborhoods are becoming so prohibitively high that middle class families hoping to
move to these neighborhoods are completely priced out. The 56% increase in incomes in
Park Slope in the last ten years, and 52% increase in median monthly rent demonstrate the
influx of upper-income persons, and how rents respond to this new market.
New York City is known for the diversity of its people, a microcosm of the melting pot that
the United States aspires to be. The diversity of incomes, race, age, culture, and religion in
New York City, each of its five boroughs, and its hundreds of neighborhoods, is what
makes this City functional and desirable for its residents, and remain marketable as a tourist
destination. If gentrification forces low-income persons, and persons of color and different
cultures from New York City's borders, it will become a homogenous, ethnocentric City,
struggling to understand and accept those of other incomes, ethnic background, and
religions. Gentrification will ultimately lead to exclusion and resegregation in a City that
has battled for years to diffuse racial tensions and promote an equality of opportunity. All
New Yorkers deserve the equal opportunity to live in safe, decent, and affordable housing.
The rezoning and upzoning proposals exacerbating displacement neglect the right of New
Yorkers to remain in neighborhoods in which they grew up, went to school, and raised
families. Are we to tell New Yorkers who held together their neighborhoods and families
through difficult times, many of whom worked to revitalize their neighborhoods, that
government policy is, in effect, forcing them to leave just as things are turning around?
The various proposals for rezoning put forth by the New York City Department of City
Planning, with the apparent acceptance of an increase in density, allow for the opportunity
to implement a density bonus system in exchange for a certain percentage of affordable
units in new development. Whether upzoning, or changing the zoning from manufacturing
to residential use, the proposals are effectively increasing the value of land for property
owners and developers. It is appropriate that this publicly endowed windfall also provides
a public good by the City incenting or mandating the provision of housing which is
affordable to moderate- and low-income families. The density and use change incentives
for producing market-rate units imbedded in the rezoning proposals are imperative to
mitigating New York City's housing crisis. However, with this comes the obligation of the
Department of City Planning to plan for the working class, tax-paying members of the
community who will be adversely impacted by this change.
II. Legal, Economic, Social, and Political Arguments to Consider
Advocating for or opposing inclusionary zoning requires an exploration of the legal,
economic, social and political arguments for and against this policy. The books, articles,
and policy briefs studied for this thesis and the interviews conducted informed the synthesis
of these arguments. This section highlights and emphasizes the most important of these.
What became apparent during the research of this thesis was the extent to which an
underlying ideology infused most of the stakeholder positions. Beliefs regarding the use
and impact of zoning related to social outcomes, the value of population diversity, and land
ownership rights, seem to overshadow the more quantifiable research and/or factually
based arguments.
The constitutionality of an inclusionary zoning ordinance is primarily an issue with
mandated programs. If New York City were to consider a citywide mandatory program, or
a mappable inclusionary provision which specific Community Boards or neighborhoods
could adopt, three constitutional concerns should be addressed: substantive due process,
equal protection, and taking. New York City would need to research and present an
evaluation of general housing need, and a relationship between this need and inclusionary
zoning to satisfy that substantive due process measures were taken. An inclusionary
program in New York City might be challenged if it is mandated in one area of the city or
not another, or is required of only a certain group of developers, based on the equal
protection provision of the constitution. The experience of municipalities around the
country demonstrates that substantive due process and equal protection issues are usually
easily satisfied if the locality thoughtfully addresses these issues in their program.
The main legal challenge to inclusionary zoning ordinances involves the claim that the
program results in a taking of the owner's property or development rights, and the potential
for monetary profit. Inclusionary zoning advocates in New York City should collect data
and evidence to demonstrate that a nexus does exist between new development and the
need for the inclusionary requirement (for example, the impact of primary and secondary
displacement that may result from development). However, as long as some type of
compensation (i.e. in the form of a density bonus) is allotted to developers, the taking issue
will most likely become a moot point. Nexus challenges will become more likely if the
affordable units are located off-site, or if contributions are made to some sort of Housing
Trust Fund, because these requirements are more indirectly related to the construction of
market-rate units. New York City government should also confirm that it has expressed or
implied statutory authority to adopt the inclusionary ordinance.
The economic rationale influencing inclusionary zoning advocates and opponents, and their
predictions regarding the economic impact of an inclusionary program, is based partially on
quantitative evidence, but also on anecdotes and ideology. A few important concepts
emerge from examining the literature, case studies, and perspectives of New York City's
stakeholders. What becomes most evident is that within the context of proposed rezoning
changes, inclusionary zoning will allow New York City to take advantage of the wave of
capital pouring into gentrifying communities without flooding the market with luxury units
that are out of the financial reach of low- and moderate-income residents. In the case of
rezoning, the windfall that developers would receive serves as the perfect bonus situation.
Any actual or perceived loss in developer profit will be more than compensated for with
density bonuses, and the use of other City financial incentives.
Responding to developer claims that mixed-income buildings are not marketable, this is
just not the case, especially in a city such as New York, where a mix of incomes is the
norm. In regular market-rate development, developers purposefully program buildings
with a mix of unit types to accommodate the difference in tenant or buyer space needs and
income. To say that a mix of incomes within a building is not feasible in New York City,
especially the mix of upper and moderate created by inclusionary zoning, is imprudent.
In terms of the economic impact of inclusionary zoning on consumers and landowners in
New York City, an important question to consider is, if indeed the developer views
inclusionary zoning as increasing her development costs, will she pass these perceived or
actual costs on to the consumer and landowner, adversely impacting the housing market?
The preemptive answer to this question is that there should be no increased development
costs if density bonuses and financial incentives are incorporated into an inclusionary
zoning program. If further investigation of development costs and budgets reveals that the
inclusionary zoning program is not offsetting the loss in income from developing
affordable units, the program should be reevaluated, and modifications made. One area for
concern and consideration is resale restrictions. Although ideal for keeping units
affordable in perpetuity, they do not allow for the owner of the affordable unit (i.e. a
cooperative or condominium owner occupying the unit), or building owner renting
affordable and market units, from benefiting from any increase in property value upon
selling. The loss of this future profit should be taken into consideration when crafting an
inclusionary zoning program in New York City.
The economic impact of a new inclusionary housing program on New York City,
Brooklyn, or neighborhood housing markets would be positive. Increased density is a
crucial catalyst for development. A thoughtfully crafted bonus program would not increase
costs for developers, but make development even more profitable. The expanded
application of a modified Inclusionary Housing Program would advance The New
Marketplace affordable housing development goals of the Bloomberg Administration of
creating 65,000 new affordable units over the next five years. It would also facilitate and
support the Mayor's vision for waterfront economic and residential development.
Communities such as Greenpoint/Williamsburg might be more willing to accept greater
density with the promise of new affordable housing for neighborhood families.
The availability of affordable units in rezoned or upzoned communities will also make
these areas much more attractive to business and commercial owners considering relocation
there. New York City's economy, service infrastructure, health care industries, and
educational facilities will continue to suffer if employees cannot find affordable housing in
the communities they serve. As Housing First! points out, "The scarcity of affordable
housing jeopardizes the city's continued economic success... since 1992, New York gained
almost 450,000 new jobs while adding only 57,500 housing units.. .Growing companies are
extremely reluctant to locate or expand in New York if their employees cannot fnd
affordable places to live. In a 1999 survey of the largest employers in the New York area,
the Office of the New York State Comptroller reported that fully 86% of respondents cited
housing costs as a serious deterrent to doing business in New York." 50
The current vision of economic development for New York's waterfront areas and the city
at large cannot be implemented if: the companies being courted by the City can't find a
pool of adequate labor within a reasonable distance for commuting; schools serving the
influx of residents can't find teachers; and healthcare facilities and emergency protection
agencies have to hire residents living prohibitively far distances from their places of
operation. Inclusionary zoning will benefit many sectors of New York City's economy if
the program thoughtfully considers economic implications and the diversity of markets
within the city.
From a social perspective, it is important to emphasize that all New York City residents
deserve the equality of opportunity for decent, safe, and affordable housing. Based on this
fundamental value, it is the City government's job to provide this opportunity. Another
value important to most New York City residents is diversity. If the City does not
proactively mitigate the adverse effects of gentrification and displacement, especially when
intensified by proposed rezoning and upzoning, homogeneity and concentrations of poverty
and wealth will dominate the residential landscape of New York City. Some warn that the
impact of an inclusionary zoning program might be marginal, depending on its scale.
Inclusionary zoning will not stop the negative consequences of gentrification and
displacement, but it can serve as a vital tool along with rent regulations and tax incentives
to maintain the City's stock of affordable housing.
As income often sadly aligns with race, ethnicity, and culture, the arguments made by some
representatives of the development community that diversity within a given neighborhood
is not practical, and that providing affordable units in upper-income neighborhoods is a
burden to the upper class, border on being segregationist. Statements suggesting that
lower- and moderate-income persons should live next to city services such as power and
utility plants, and transit services, because of low land costs found in these areas makes one
question the motives of the speaker. This rationale was used for the site-selection process
of public housing units in the 1940's, 50's, and 60's. One would hope that such flawed
logic would not steer the policies of New York City's planning agencies.
It is also important for New York City inclusionary zoning advocates to think through the
social implications of allowing the on-site versus off-site development of affordable units
under an inclusionary zoning program. Allowing off-site development will provide the
same number of affordable units, but it may perpetuate the concentration of poverty in
certain neighborhoods, and will not support the value of diversity discussed above.
The argument of the Department of City Planning that it does not want to use zoning for
social engineering, and is therefore opposed to future inclusionary zoning programs, is
illogical. Zoning is not just a tool that shapes a physical environment. Any zoning
resolution inherently leads to social and economic impacts, including the rezoning
150
Housing First! Buildingfor the Future: New York's Affordable Housing Challenge, 10-11.
proposals put forth by the Department. When DCP zones for aesthetics (for example,
contextualizing the brownstone area of Park Slope), it is implying more than the idea that
the preservation of that aesthetic value of the buildings is worthy of legislation. It is also
implying that the predominantly wealthy population of that area has the right to stay in
their homes, unaltered by and protected from market forces. Contrast this with the
upzoning of Fourth Avenue, where the housing stock is not quite as aesthetically pleasing,
yet is still very preservable. The major difference is that the occupants of the buildings
along Fourth Avenue have lower-incomes and are primarily working class, relative to the
population of the Upper Slope (brownstone neighborhood). So the wealthy neighborhood
gets a contextual zoning, and the lower-income neighborhood gets upzoned? Does DCP
care more about preserving buildings than homes? Do they truly not realize the social
implications of the zoning policies they are implementing?
Advantageous to City Government and politically attractive, inclusionary zoning presents a
low-cost alternative for providing affordable housing by leveraging private resources, as
well as the City's other financing incentive tools. This type of public/private partnership
program is crucial amidst New York City's budget crisis. As previously mentioned,
inclusionary zoning supports the Bloomberg Administration's vision of the waterfront, its
New Marketplace objectives, and the Department of City Planning's increased density and
use changes of its rezoning proposals. Much of the city is not built to its fullest capacity
for density; inclusionary zoning could facilitate politically palatable density increases.
Spearheaded by local affordable housing development organizations, and supported by the
Brooklyn Borough President, City Council Members, several Commissioners of New York
City's City Planning Commission, and many developers, the adoption of an inclusionary
zoning provision seems politically feasible. However, the Department of City Planning's
laissez-faire approach is not compatible with the advancement of an inclusionary zoning
program. The laissez-faire approach is simply unacceptable, as historically, other
supposedly "free-market" zoning policies have created the need for inclusionary zoning in
the first place. Furthermore, the Department of City Planning, as a part of the elected
Bloomberg Administration, has the obligation to ensure decent, safe, and affordable
housing to citizens of New York City. The Department of City Planning's concern about
targeting already thriving areas versus distressed areas with resources does merit
consideration. However, as stated in the Fifth Avenue Committee's November 2002 policy
brief, "The financial incentives projected for use here (4% tax credits and tax-exempt bond
financing) are not extremely scarce or competitive. They are available for most projects
where developers seek to utilize them (unlike other City and State programs which are
more competitive)."i 5 ' Therefore, targeting resources in one neighborhood would not
result in depleting resources for other areas.
Politics makes strange bedfellows. Many New York City developers and affordable
housing advocates both want to expand a modified version of the R1O Inclusionary
Housing Program. The question is, why? Obviously, developers think the program
profitable. If combined with tax abatements and other City financial incentives, developers
...
Fifth Avenue Committee, EncouragingAffordable Housing Through InclusionaryZoning in Park Slope,
Brooklyn, 10.
will make money off of this venture. Support from the for-profit development community
is great for affordable housing advocates who want more affordable housing, right? Not
necessarily. As with any policy, the motivation of supporters and specific aspects of the
policy should be considered. Most developers support an inclusionary program only with
the allowance for off-site affordable units, the implications of which were discussed above.
Developers are not only advocating for off-site affordable units, they want the right to
develop them outside of the Community Board, far from where their market-rate
development is being built (presumably because they can find lower land costs in other
areas, enabling them to make more of a profit). New York City elected officials, planning
entities, and the communities involved in crafting an inclusionary zoning program will
have to decide if they are willing to accept this perpetuation of segregated neighborhoods
in order to get new affordable units built.
Some affordable housing advocates and developers might also share the political position
of not supporting an inclusionary zoning program. Affordable housing advocates might
think a voluntary program is too soft. They might also be opposed to a program targeting
moderate-income families as opposed to low- and very low-income families. Meanwhile,
developers might be opposed to the same inclusionary program as they believe
participating will result in an increase in costs, and therefore a decrease in profits.
After examining the legal, economic, social and political arguments surrounding the use of
inclusionary zoning in New York City, it becomes clear that such a program, if rendered
with the input of all stakeholders, would be successful in providing both affordable and
market-rate housing. It also becomes clear that politic pressure and ideology are
motivating the government agencies and some of the elected officials involved in this
debate. Strategies for navigating through this political and ideological web are discussed in
section IV FutureResearch and Policymaking of Chapter 5.
III. Recommendations for Elements of a New York City Inclusionary
Zoning Program
Changing the specific elements of an inclusionary zoning program will influence the legal,
economic, social, and political arguments examined above. More importantly, the
structuring of the elements will directly impact the success of the program in producing
affordable units. The following points outline the general elements that comprise
inclusionary zoning programs, and include recommendations for these elements relative to
New York City.
A. Mandatory or Voluntary?
Generally speaking, inclusionary zoning can either be voluntary or mandatory, judicially
mandated, or legislated as a part of the zoning code. A citywide mandatory program in
New York City would be equitable, and ensure that affordable housing units are
produced. It is very doubtful given the high demand for residential development in New
York City that developers would shun New York City as a whole just because of an
inclusionary housing program, especially if the City crafted the program so that it would
be more profitable than regular development. Another option for New York City is to
propose an amendment to the Zoning Resolution allowing for mappable inclusionary
zoning. Community Boards and neighborhoods could decide for themselves, given the
state of the housing market in their district and the capacity for development, whether
they think the program would work. However, one drawback to not mandating a blanket
program for the entire city is that developers might avoid developing in the areas that
adopt a mandatory inclusionary provision. It should be noted that most voluntary
inclusionary zoning programs across the country have not produced much low- and
moderate-income housing. If New York City wants to create a voluntary program, it is
paramount that it is combined with the City's other financial and tax incentive programs
so that developers motivated by profit will choose to participate.
B. Population Targeted
New York City inclusionary zoning policy analysts should consider the implications of
targeting moderate-income versus lower-income families. There is a dearth of housing
development for middle-income families. Most government housing programs like
public housing and Section 8, as well as subsidy programs for local affordable housing
developers, target the very poor. However, it is possible that offering incentives for
developing units targeting populations at 80%, 120% and even 150% of area median
income ends up giving developers bonuses and resources to develop units that are really
almost market-rate anyway. Furthermore, the extraordinarily long waiting lists for public
and Section 8 housing do point to a dire need for very low- and low-income housing.
The decision of whether to target moderate- versus low-income families will most likely
be based on financial feasibility. The population targeted can also determine the degree
to which an inclusionary zoning program mitigates displacement. For instance, if there is
not local preference for affordable units developed under an inclusionary program, it is
likely that people immigrating to the community (perhaps young middle class, white
professionals) will occupy the new units, and not those long-time residents in jeopardy of
being displaced.
C. Incentives to Balance Costs
A New York City inclusionary zoning program should provide an adequate density bonus
to offset the loss in future income from developing affordable units. New York City
government should also allow for the use of tax-exempt bond financing, tax credits, and
tax abatements under an inclusionary program. Waiving development fees, expediting
the permitting process, allowing flexibility in site planning, and donating city owned land
or buildings are other incentives New York City could provide to developers who take
advantage of an inclusionary zoning program. Given the lessons of New York City plaza
incentive zoning in the 1970's, program drafters should spend time modeling program
incentive features to ensure a balance between profitability for developers, and giving
away too much in terms of City resources and density.
D. Number or Percentage of Affordable Units Required
The number or percentage of affordable units required of New York City developers will
greatly impact the financial feasibility of an inclusionary zoning provision. Architectural
and financial modeling by the City, potential developers, and affordable housing
advocacy organizations should focus on the relationship between a program's density
bonus and the required affordable units (i.e. a sliding scale, one to one ratio, etc.)
E. Tenure
Whether the affordable units that can be developed under an inclusionary program are
homeownership, rental, or both, needs to be determined. It is generally thought that
homeownership strengthens the stability and health of a neighborhood. However, New
York City is a city of renters, and not all residents have the financial capacity or desire to
become homeowners. Further, resale restrictions on cooperative or condominium units
might dissuade potential homeowners from buying units designated as affordable in
perpetuity.
F. Purchase Price or Rent
This aspect ties very closely to population targeted, as most likely price or rent will be
determined based on the income of tenants. In New York City, where many moderateand lower-income residents pay upwards of 50% of their income on housing, setting price
or rent at a level no more than 30% of income would be prudent.
G. Location of Affordable Units
If a New York City inclusionary zoning program mandates the development of affordable
units on-site, the social goals of diversity and equity discussed in this thesis will be
addressed. However, within a building, a developer should be able to maximize the rent
or price of market units by locating them on higher floors and building corners, and not
be required to disperse affordable units throughout the building. Dispersing affordable
units so that tenants are not isolated or chastised is good in theory, but in practice,
residents of market units have not generally negatively reacted to lower-income tenants.
Given the high land costs in New York City, most developers would like to build
affordable units off-site, far from the pricey neighborhoods where their market-rate
developments are located. As previously discussed, this will result in resegregation and
does not promote the value of equality of housing opportunity for all New Yorkers.
H. Term of Affordability
All affordable units produced under a New York City inclusionary zoning program
should be affordable in perpetuity. Some inclusionary zoning advocates claim developers
will demand an exit strategy, and will not participate in a voluntary program without one.
Yet making a unit affordable for a predetermined number of years allows the developer to
receive two bonuses: a density bonus during development, and the profit of selling or
renting the units at market-rate the end of the affordability term. New York City needs
affordable housing too badly to allow these units to escape back into the market.
However, resale restrictions and rate of return restrictions are double edged swords, as
although they allow units to remain affordable in perpetuity, they take away a moderateor low-income owner's ability to cash-in on her asset's market value.
I. Provision for In-lieu Fees
The 1983 Pratt Institute inclusionary zoning proposal included the establishment of a
Housing Trust Fund. Unfortunately, in 2003, scarcity of land is a major blockade to
developers of affordable housing. If land is available, affordable housing developers are
often outbid by for-profit developers. Allowing developers to contribute to an in-lieu
fund instead of actually developing units puts the burden on the City and local affordable
housing developers to find land to acquire, and to spend time and resources developing
the housing. Furthermore, a Housing Trust Fund would also not support the goal of
diversity, as units would almost certainly not be located in upper-income neighborhoods.
J. Comparability in Quality of Market and Affordable Units
A New York City inclusionary program should allow developers to incorporate lower
cost products, fewer amenities, and smaller sizes for affordable units, as long as a
predetermined standard of quality applies to all units. This would decrease the
development costs of the affordable units, and allow for either more affordable units to be
built, or those that are built to have deeper affordability.
K. Program Management
The implementation plan, process for program monitoring, and ongoing management and
maintenance plans of any inclusionary zoning program should be carefully considered by
New York City policymakers. If policymakers decide to use the current R1O
Inclusionary Housing Program as a model, it is imperative that entities other than nonprofits are permitted to manage the units, and that developers have the ability to use
income from the affordable units to cover debt service.
IV. Future Research and Policymaking
Future research regarding the use of inclusionary zoning in New York City will better
inform advocates, as well as the broader discourse. However, simply educating the
stakeholders about precedent success, and the legal, social, and economic arguments for
and against inclusionary zoning, will most likely prove fruitless given the current political
climate in New York City. The political and government infrastructure is ideologically
opposed to the concept of inclusionary zoning. Therefore, research must be accompanied
by the development of a strategy to balance the political power of those in New York City
opposed to inclusionary zoning.
A. Research
Setting aside the political obstacles, it is useful to point out the gaps in data and
knowledge that ideally would be filled before a new inclusionary program is crafted for
New York City. It is not anticipated nor expected that all of the below recommendations
for research will be pursued, but it is important to, at the very least, recognize them.
1. Research of the successes and failures of inclusionary programs from around the
country should be conducted. There are several initiatives to collect this
information currently underway around the country; New York City stakeholders
should tap into these resources. When looking at precedents, it might be useful to
collect data regarding some of the macroeconomic concerns raised about
inclusionary zoning programs, including the concern that market-rate housing
prices will rise if mandatory inclusionary zoning is implemented.
2. To better understand the claims of developers that an inclusionary zoning program
might increase costs, a study analyzing development costs in New York City could
be conducted by an impartial research entity. This could include, but not be limited
to the following costs: land, site improvement and preparation, construction, interest
and financing costs, fees, permits, and processing. Further, this study could look at
average sales and rental income to ascertain a norm of developers' profit margins in
New York City. The goal of this study would be to appropriately match the
incentives being used to offset developers' costs and forgone future income caused
by developing affordable housing under an inclusionary program. One would have
to take into account the previously discussed amorphous and subjective nature of
the "numbers" when conducting this study, and analyzing its results.
3. Financial and architectural modeling using specific case study development sites
could be conducted, again by an impartial entity, to understand the feasibility of
applying different versions of an inclusionary zoning program.
4. It was mentioned by a staff member of the Citizen's Housing and Planning Council
that some developers in New York City are not building to the allowable envelope.
If this is the case, it could impact the success of an inclusionary zoning program.
Further research regarding this claim is advisable.
5. There is a dearth of available data regarding gentrification and displacement in New
York City. Indicators for gentrification and displacement need to be collected to
better inform all planning policy, not just inclusionary zoning. In addition to
analyzing neighborhood, Community District, borough, and citywide indicators,
specific case studies on direct displacement should be conducted. For example, one
could look at new developments to determine whether sites with occupied buildings
were assembled for demolition, and if so, if residents were proactively relocated, or
left to fend for themselves. These data results could be used as a part of the
political strategy to point to a nexus between new development and the need for
affordable housing.
B. Policymaking
Formal and informal coalitions of New York City affordable housing developers and
advocates, and supportive elected officials and residents, are initiating a grassroots
campaign to bring the concept of inclusionary zoning back into the City's policy agenda.
This grassroots initiative is in response to the ideological opposition to inclusionary
zoning of New York City's political power structure. As the policy debate continues, a
few fundamental questions should be asked:
First, how broad of an initiative is this? Should advocates be targeting only
neighborhoods with proposed rezoning or upzoning? Should they be looking proactively
at neighborhoods like Bedford Stuyvesant and Crown Heights in Brooklyn, and
Washington Heights and Inwood in Manhattan, possibly the next in line for
gentrification, regardless of existing DCP rezoning proposals? Should a citywide
coalition of all five boroughs advocating inclusionary zoning be formed? Given the
unfortunate track record of voluntary programs, is it prudent to fight for these? Would it
be more useful to push at the State level for a mandatory program?
Another question for stakeholders in New York City's debate to ponder is what built
form are they willing to accept? In other words, what maximum density are they willing
2
to live with in order to have affordable housing built?
The answers to these questions, as well as the other topics discussed in Chapter 5, should
lay the foundation for future policymaking in New York City. Beyond the above
recommendations for research, the following steps could be taken as a part of the political
strategy to bring inclusionary zoning to the policy table:
1. Inclusionary zoning advocates should continue to align their efforts with the
timeline of Department of City Planning rezoning and upzoning proposals, while
defining the broader scope New York City's inclusionary zoning initiative.
Eva Hanhardt, Director, The Planning Center, Municipal Art Society, interview by Gretchen Maneval,
August 2003, New York, New York.
152
2. Grassroots initiatives such as the Brooklyn Coalition for Equitable Development
(BCED)15 3 should be encouraged, serving to balance the political power of those
opposed to inclusionary zoning. BCED is a newly formed grassroots organizing
campaign whose goal is to update antiquated zoning policies in New York City that
perpetuate a disparity of income, and a lack of housing affordability and quality.
BCED has developed a political strategy to introduce new sections of zoning text
into City law that serve as tools for equitable development. BCED's proposed
zoning tools include planned manufacturing districts and inclusionary zoning, and
other policies such as tax increment financing. Such coalitions and grassroots
efforts should also enhance outreach and education for New York City residents
regarding the concept of inclusionary zoning and policy options. This process
could be facilitated by engaging the local media.
3. Advocates for inclusionary zoning should plan a forum for the debate, such as the
1983 Pratt Institute/Metropolitan Action conference. The conference could bring
experts from around the country together to discuss programmatic precedents and
future New York City policymaking. All of New York City's stakeholders,
including those opposed to inclusionary zoning, should be invited to this event to
ensure that a comprehensive debate precedes whatever consensus is reached,
whether this is an agenda for future research, inclusionary policy goals, or specific
programmatic elements.
4. Displacement data collected from specific new developments could add fuel to the
argument that a nexus does exist between new development and the need for
affordable housing. This evidence could lead to the involvement of the courts in
mandating some type of inclusionary zoning in New York City.
5. Any political strategy of inclusionary zoning advocates should use data modeling
and numbers judiciously, as getting bogged down in a war of numbers will not be
productive. For example, inclusionary zoning advocates conducted financial and
architectural modeling for a specific site along Fourth Avenue in Park Slope to
demonstrate that inclusionary zoning, especially when combined with other
financial incentives, would be profitable for developers of market-rate housing.
Those opposed to inclusionary zoning simply said these numbers were incorrect,
without providing evidence supporting their assertion. Months later, the
Department of Housing Preservation and Development released spreadsheets
containing data they said "proved" inclusionary zoning wouldn't work along Fourth
Avenue. After reviewing the HPD spreadsheets, inclusionary zoning advocates said
that HPD's numbers did show that inclusionary zoning would work. One can see
how a difference in ideology can impact the interpretation of numbers, and why
getting mired in the subjectivity of data modeling might not benefit either side of
the debate. Data modeling is important, but might be seen as more legitimate, if a
nonpartisan third party entity conducted the research.
153
BCED is comprised of a coalition of Brooklyn affordable housing developers and community development
corporation representatives.
6. The Park Slope Rezoning should be used as a model for "lessons learned" for future
inclusionary zoning political strategies. Despite financial and architectural
modeling, the presentation of precedent successes, and the documentation of both a
housing crisis and the impact of rezoning and upzoning on gentrification and
displacement, the decision of whether to include inclusionary zoning along Fourth
Avenue in Park Slope came down to politics. The fact that a deal was struck
without an inclusionary zoning related amendment at the New York City Council
Zoning and Franchise Subcommittee public hearing before the public testimony
began undermines this country's democratic processes. How can inclusionary
zoning advocates, and independent citizens, rely on New York City public approval
processes if they cannot even trust that they will be given a voice at public
hearings? The pressure of a continually shrinking City budget, and competing
programmatic funding demands, leaves locally elected officials at the mercy of the
ideologies of the Bloomberg Administration and related City agencies. The
undeniable presence of politics in this debate underscores the need for grassroots
coalition building as discussed above in point 2.
7. Affordable housing and inclusionary zoning advocates should be wary of last
minute offers of money from government agencies to develop affordable housing.
First of all, given the budget crunch, it is likely that the $6 million offered at the
Zoning and Franchise Subcommittee will be one of the first line items in the budget
that is cut. If it is allocated, the $6 million means very little without land available
along Fourth Avenue (where a 3100sf lot just went on the market for $2.1 million)
to develop the housing on. Even if there were land, $6 million would only allow for
the construction of about 60 affordable units (far less than estimated with
inclusionary zoning). Furthermore, HPD's goal of producing 130 affordable units
with proposed $6 million allocates only about $45,000 for each unit. Estimated
construction costs of $100,000 per unit leaves a huge funding gap; where will this
gap financing come from?
Any political strategy should take into account the different typologies of stakeholders
and their needs. Quantitative and qualitative research regarding inclusionary zoning,
when combined with a political strategy, will address the varied arguments of developers,
housing organizations, elected officials and government entities.
If the providers of affordable housing in New York City want to turn this policy
discussion into law, a comprehensive and collaborative effort involving all the city's
housing experts needs to take place. Crafting a proposal acceptable to Mayor Bloomberg
and his administration will require the close examination of all arguments and program
options presented in this thesis. Any initiative should proactively address the anticipated
arguments against inclusionary zoning, some of which can be dismissed as political and
subjective in nature. Other opposition arguments need to be fleshed out, mitigating any
detrimental aspects of an inclusionary zoning program.
It is a critical moment in the history of New York City: either the adoption of a new
inclusionary zoning policy that provides for the voluntary or mandated construction of
affordable housing in new development is explored, or New York City will be faced with
the exodus or homelessness of thousands of low- and moderate-income residents who can
no longer afford to live in their own city. It is imperative to New York City's economy
that it does not lose the working class, the people who literally allow the city to function
on a daily basis: teachers, police officers, transit employees, and trades workers. While
New York City values and encourages real estate investment in its communities, it must
demand a balanced and equal revitalization that benefits all residents.
Appendix
Examples of Inclusionary Housing Program Characteristics" 4
' 4Business and Professional People for the Public Interest, Database on-line, Available from
http://www.bpichicago.org/hcr/rihi/pubs/ih matrix.pdf, Accessed 11 May 2003.
98
Examples of Inclusionary Housing Program Characteristics
Year of
Inception
Affordable
Units
Threshold Number
of Units
Produced
Boston,
Massachusetts
2000
Boulder,
Colorado
1999'
Davis,
California
Fairfax County,
Virginia
1990
1991
68
1723
Control Period
"In lieu of" payment/
Off-site Development
Density Bonus
Development exceeding
10 units
10% of on-site units
20% low-income in for-sale
and rental developments 2
May build off-site if 15% of all units
affordable
"Maximum allowable by law"
In lieu of payment permitted
None
Tax break for
developer
Fee permitted for smaller
developments; Half of for-sale units
may be built off-site; Developers have
flexibility with rental unit obligation 3
None
Waiver of
development
excise taxes
In lieu of payment permitted for
developments under 30 units, or
other demonstration of "unique
25%
None
200/ for single
family units
10% for multi-
None
Permanent affordability by
deed restriction
25% in for-sale developments4 Permanent affordability for
rental units
25-35% in rental
Development exceeding 5
No control period for for-sale
developments'
units
Development exceeding
50 units6
Irvine,
California
1978
Over 3400 No threshold #-applicable
to all residential
development7
Longmont,
Colorado
1995
104 of 352
anticipated
No threshold #"
units
hardship"
12.5% in single family home
developments
6.5% in multi-family
15 years for for-sale housing
20 years for rental housing
PHA may purchase 1/3 of all
Not permitted
developments
units to keep affordable
Voluntary goal:
15% of all units
20-30 years; determined caseby-case depending on
financing
In lieu of payments and other
alternatives to on-site units
permissible"
No control period for for-sale
units
5 years for rental units
May make in lieu of payment to
Affordable Housing Fund
Case-by-case consideration of off-
10% of all units
in annexation areas
Other
Developer
Incentives
___________________
Approx. 50 No threshold #-applicable
of nearly 200
to all residential
anticipated
development
1474
Set-aside Requirement
family units
25%9
None currently
offered'*
Yes
Relaxed regulatory
requirements 2
site construction
Montgomery County,
Maryland
1974
Over 10,000
Development exceeding
50 units
Santa Fe,
New Mexico
1998
1of 36
anticipated
No threshold #
Business and Professional People for the Public Interest
12.5-15% of all units
Of these, PHA may purchase
33%, and qualified not-forprofits may purchase 7 %/6
10 years for for-sale units
20 years for rental units
11% in developments targeted
over 120% AMIO
30 years for all units; 30 year
16% in developments targeted period starts over with each
6
new occupant
over 200% AMI'
__
_80%
May request approval to make inlieu
of payment or build affordable units
off-site in contiguous planning area if
low and moderate income residents
will not be able to pay expected
housing costs
Not permitted, except in case of
economic hardship
Up to 22%
Waiver of water,
sewer charge and
impact fees. Offer
10% compatibility
allowance and
other incentives1
Bonus equals setaside %. 16% in Waiver of building
fees
developments
targeted under7
of AMI
Examples of Inclusionary Housing Program Characteristics
Boulder had an prior inclusionary housing ordinance in effect in the 1980s and early 1990s. The current ordinance was designed to improve flaws in the former program.
2 Projects of 4 or fewer units may either provide one unit of affordable housing on or off-site, dedicate land for affordable housing, or make an "in lieu of" contribution. Boulder may negotiate affordable housing set-asides of up to 5 0 /o in
projects built on annexed land; in such cases, the units are split evenly between low-income households and moderate-income households.
3 Developers of affordable rental units have flexibility with regard to the on-site/off-site mix, and the extent to which they may meet their obligation by donating land or dedicating pre-existing homes for low-income households.
25% set-aside achieved through combination of on-site construction and land dedication.
4
35% set-aside required for rental projects over 20 units; 25% set-aside required for projects between 5 and 19 units; set-aside achieved through on-site construction and land dedication.
6 Developers must pay a fee equal to 1%of sales prices if a development does not exceed 50 units. In addition to meeting the 50 unit threshold, housing must be developed at a density greater than one dwelling unit per acre in an approved
sewer service area to trigger an affordable housing set-aside obligation.
The applicability of Irvine's program is dependent upon city and federal funding availability. Compliance with its terms is a "goal," not a strict requirement, though a city official reported that nearly all developments comply with the
program.
Developers in Irvine may pursue a range of alternatives to construction of affordable units on-site. In addition to fees in lieu of construction, developers may provide land to not-for-profit developers of affordable housing, convert existing
market rate housing into affordable housing, and extend the term of affordability on current affordable units.
California state law requires a 25% density bonus for developers of affordable housing. In Irvine, however, not many developers take advantage of this option.
1 Although Irvine currently offers no developer incentives other than a state-required density bonus, it has in the past (and will consider doing so again in the future) offered developers of affordable housing reduced parking requirements,
reduced fees, reduced park land dedications, and expedited permitting.
" All residential development on land annexed to the city triggers an affordable housing obligation.
' 2Developers who construct affordable housing are eligible for regulatory incentives, including reduced parking requirements, smaller setback requirements, and reduced landscaping obligations.
" Montgomery County permits developers to increase the sales prices of units by 10% to fund amenities that make the affordable units visually compatible with market rate units. Developers of affordable units also may build up to 40%
attached units in an otherwise detached unit development, and they may receive some concessions on lot sizes that enable them to use their land more efficiently.
14
Santa Fe triggers an affordable housing obligation if any dwelling unit in a development is targeted to households with incomes over 120% of the area median income (AMI).
15Homes targeted to households earning between 120 and 200% of area median income (AMI) are priced between $240,000 and $400,000.
6 Homes targeted to households earning in excess of 2000/ of area median income (AMI) are priced over $400,000.
" Homes targeted to households earning less than 80% of area median income (AMI) are priced under $150,000.
Business and Professional People for the Public Interest
List of Graphs, Maps, Tables, and Charts
Graphs
Graph 1: New Housing Units vs. New Households in New York City, Brooklyn, and Park
31
Slope 1990-2000........................................................................
Graph 2: Increase in Median Monthly Rent in Park Slope, 1990-2000....................33
Graph 3: Increase in Median Household Income in Park Slope, 1990-2000..................33
Maps
Map 1: New York City's Boroughs and Community Boards...................................37
Map 2: Park Slope Existing Zoning............................................................39
Map 3: Park Slope Proposed Zoning............................................................39
Tables
Table 1:
Table 2:
Table 3:
Table 4:
Current Fourth Avenue Zoning.......................................................41
Proposed Fourth Avenue Zoning..........................................................41
H ousing N eed...............................................................................48
Inclusionary Housing Program Density Bonuses by Type and Location of
Affordable Housing Provided.........................................................53
Table 5: Summary of Bill deBlasio Proposal...............................67
Table 6: Current R6 and Proposed R8i FAR and Building Height..........................75
Charts
Chart 1: NYC Stakeholders for Inclusionary Zoning.............................................55
Chart 2: Uniform Land Use Review Procedure (ULURP) for Park Slope Rezoning
Proposal......................................................................................59
101
102
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108
Biographical Note
Gretchen Maneval is an affordable housing developer in Brooklyn, New York, working as
Project Manager in the Housing Development division of the Fifth Avenue Committee.
Gretchen graduated with a Masters in City Planning from the Massachusetts Institute of
Technology in June, 2003, and received a Bachelor of Arts with High Distinction from the
University of Virginia in 1996. Prior to her graduate education at MIT, Gretchen served as
Senior Research Analyst with the congressionally mandated Harvard Graduate School of
Design's Public Housing Operating Cost Study, and Senior Research Consultant with
Accenture in HUD's Office of Public and Indian Housing. She also served as an Arts
Program Administrator with the AmeriCorps Program for one year upon her graduation from
the University of Virginia.
109
110